The following article is brought to you by Lily Leung at UTSanDiego.Com
San Diego County borrowers are starting to receive cash payments from major banks for alleged mortgage abuses. Recipients are gladly depositing the checks, but many are dissatisfied with the amounts, which cannot be disputed.
“I got a $400 check without any real explanation than just, ‘This is the final payment,’ ” said Carmel Valley resident Jack Hollenbach.
Hollenbach, 57, underwent a double-lung transplant, rendering him unable to work and keep up with his mortgage payments. After 18 months of negotiations, his bank did grant him a new monthly payment, except it was $200 higher than the original amount, he said. He could not afford the new payment, and he lost his home to foreclosure.
Hollenbach’s check is among more than 4 million payments that are being mailed out to consumers in waves. Those cash payments, totaling $3.6 billion, are part of a deal between 11 major banks and federal regulators that settle allegations of mortgage abuses that may have occurred in 2009 and 2010.
Those years mark the height of robo-signing, the process of approving foreclosure documents with little or no approval.
Rhett Edwards, of Allied Gardens, also is disappointed in how much he got through the settlement, which was $1,000.
Edwards struggled to pay his mortgage after shattering his arm in a work-related accident. His bank instructed him to fall behind on his payments for three months to qualify for a loan modification, he said.
For the next year, he was repeatedly turned down for a modification. He finally got caught up with back-payments and fees after coming up with $20,000, part of which came from family, and saved his home.
“I was hoping for $20,000 (in restitution) … when you really look at the damage they’ve done to me,” Edwards said.
But borrowers like Hollenbach and Edwards cannot challenge their compensation amounts.
“The payment is final,” the boilerplate letters read. “There is no process to appeal the payment.”
The lack of transparency of how those payments were decided isn’t just a concern among borrowers receiving the checks. They’re also a concern for some DC lawmakers, who have been unsuccessful in extracting settlement details from regulators.
Rep. Elijah E. Cummings, D-Maryland, has introduced a bill that would appoint an independent third party to oversee the payment process and get answers.
“Regulators refuse to provide even the most basic information about the extent of the abuses that were uncovered,” said Cummings in a statement.
“Since federal regulators now plan to rely on these banks to determine payouts and deliver settlement funds to borrowers, we need an Independent Monitor to bring transparency and accountability to this process,” Cummings added.
The foreclosure settlement has encountered several issues since its inception.
It actually began as a process that allowed borrowers to request free foreclosure reviews with the possibility of restitution if problems were found. Complications and lack of participation killed the program, making way for the mass settlement.
Payments, ranging from $300 to $125,000, have been mailed out by banks through a consultant, Rust, since mid-April.
Borrowers can call Rust at (888) 952-9105 if they have any questions about possible payment or payment issues.