$3.7 billion in ‘robosigning’ payments to begin in April

Homeowners who faced a wrongful foreclosure will receive compensation from lenders in amounts ranging from a few hundred dollars up to $125,000 beginning in April, federal regulators revealed.

The payments stem from a January settlement between federal regulators and 10 banks over widespread mistakes found in the processing of foreclosures. The banks had agreed to stop national reviews in exchange for the payouts. The banks were to review some 4.2 million mortgages, but after a year and a half, only about 104,000 loan reviews had been completed.

“It just doesn’t make sense for these mortgage servicers to continue funneling money to consultants that could be better used to help distressed borrowers who have lost their homes,” said Thomas Curry, Comptroller of the Currency. “The cost of concluding these reviews would far exceed the harm that would be found.”

The banks have agreed to pay a total of $3.7 billion to compensate borrowers.

The settlement has been criticized by some who say the deal fails to fairly compensate those who wrongfully lost their homes to foreclosure by “robosigning” and other shoddy foreclosure document practices.