More than 72,000 Florida borrowers whose homes were taken through foreclosure will receive reparation checks this month from the National Mortgage Settlement, which concluded the worth of each loss is $1,480.
The payouts, called trifling by some homeowner advocates, were announced Tuesday. They are part of $1.5 billion in cash compensation that was written into the landmark 2012 settlement between the nation’s attorneys general and its five largest lenders.
Eligible borrowers who had their homes repossessed between 2008 and 2011 were mailed notices last year with information about how to apply for the money. The more who responded, the less each would receive, and initially it was thought borrowers would get just $840 each.
But fewer than expected sought the reimbursement. In Florida, about 53 percent of the 167,400 borrowers who were mailed letters applied. Nationwide, 55 percent of the more than 1.7 million borrowers applied. Ultimately, not all borrowers met eligibility requirements, which included that the home foreclosed on was a primary residence.
“These payments help compensate borrowers for the mortgage servicing abuse that they likely endured, and I’m pleased the final amount of $1,480 is much higher than the minimum amount we first announced,” said Iowa Attorney General Tom Miller, the lead state negotiator of the settlement with Bank of America, Ally Financial, Wells Fargo, JPMorgan Chase and Citi.
The lenders signed the $25 billion agreement to atone for years of foreclosure-related abuses. In addition to the cash payments that will begin being mailed Friday, the banks have also provided billions of dollars in mortgage relief through debt reductions, short sales and mortgage refinances.
Miller spokesman Geoff Greenwood said 962,000 homeowners nationwide will receive a check, all for the same amount.
Some consumer advocates question the $1,480 payments, saying they are an admission of the fraud committed by the banks and do little to offset the loss of a home taken in a challengeable foreclosure.
“These checks are a joke,” said South Florida real estate attorney Roy Oppenheim. “If homeowners sued the banks for the fraud, forgery and perjury they committed, they could be getting more.”
The payouts are being handled by Minneapolis-based Rust Consulting, the same firm accused of bungling some disbursements to 4.2 million borrowers who received compensation through the Independent Foreclosure Review — a separate program overseen by the Office of the Comptroller of the Currency.
Royal Palm Beach homeowner Tom Soroko, who said he has been trying to negotiate a loan modification with his lender since 2009, received a $2,000 check from the Independent Foreclosure Review.
He said he’d prefer to have a successful modification and his foreclosure case settled.
“They were supposed to give us different options going back several years now,” Soroko said. “I beg, literally, please tell us something, anything that is going on.”
The announcement about the National Mortgage Settlement checks came the same day Gov. Rick Scott signed a bill into law that outlines how $200 million from Florida’s settlement award will be used.
The biggest share of the money, $60 million, will go to the Florida Housing Finance Corp., for the state apartment incentive loan (SAIL) program, mostly to provide rentals for the elderly and developmentally disabled. Another $40 million goes to the State Housing Initiative Program (SHIP), also run by the FHFC.
Bondi acknowledged that the settlement didn’t steer money directly to homeowners struggling to keep homes. But she said that stemmed from the need to maintain accountability over the dollars.
“It’s hard to write checks directly out there. It needed accountability,” Bondi said. “That’s why we’re going through these various agencies, just to make sure it’s going where it’s meant to go.”
For more information on the National Mortgage Settlement go to nationalmortgagesettlement.com or call 866-430-8358.
Palm Beach Post Staff Writer John Kennedy contributed to this story.