NorthJersey.com

5,300 NJ Homeowners To Receive Foreclosure-Related Payments

Checks will go out to 5,300 in New Jersey in a settlement of alleged foreclosure abuses

The Record (NorthJersey.com) — Wednesday, June 5, 2013

BY KATHLEEN LYNN
STAFF WRITER
The Record

About 5,300 New Jersey mortgage borrowers are about to receive checks of $1,480 each as part of a $25 billion settlement involving alleged foreclosure abuses by the nation's five largest mortgage servicers.

The payments come more than a year after the settlement was announced in February 2012 by federal regulators and 49 state attorneys general. The authorities had investigated practices such as robo-signing, in which mortgage industry representatives signed legal documents without checking them in their rush to evict homeowners in distress.

"These payments are part of the effort to compensate borrowers for the mortgage servicing abuses they experienced," state Attorney General Jeffrey S. Chiesa said in a statement.

Some consumer advocates have criticized the payments as too small.

"Someone forges documents and you lose your house, and they give you $1,500. That's quite sad; it's puny," said Phyllis Salowe-Kaye, head of NJ Citizen Action, the state's largest housing advocacy group.

Borrowers who believe they were unfairly treated can still pursue their own legal action, even if they receive the payments, Chiesa said.

Homeowners eligible for the payments lost their homes to foreclosure and experienced servicer abuses from the beginning of 2008 through the end of 2011, according to Leland Moore, a spokesman for the attorney general. Notifying eligible homeowners, processing their claims and setting the amount of the checks was handled nationwide by the group of 49 states that participated in the case, he said.

The five settling mortgage servicers are Ally Financial, Bank of America, Citi, JPMorgan Chase and Wells Fargo. The checks will go to borrowers who submitted valid claims through the settlement process. The 5,300 New Jersey checks, which total about $7.8 million, are among more than 962,000 payments that will be sent out nationwide from next Monday through June 17 by a company called Rust Consulting.

Under the settlement, mortgage servicers also pledged to provide other relief for borrowers, such as lowering their mortgage principal amounts to make them more affordable. In addition, servicers promised better customer service, such as giving troubled homeowners an individual contact person, rather than have them bounce from one employee to another.

And they will not pursue foreclosure if they're working with a homeowner on modifying the loan. Many homeowners complained that servicers were unresponsive, lost their paperwork and in many cases moved ahead with foreclosures while telling borrowers they were trying to help them stay in their homes.

The settlement was the largest of several recent agreements related to the robo-signing allegations, which first arose in late 2010. As regulators, the courts and lenders dealt with the robo-signing issue, foreclosure activity plummeted in New Jersey, leaving a large backlog of distressed properties. But in the wake of the settlements and several court decisions, the mortgage industry has increased the pace of foreclosure activity in the Garden State.

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