Federal regulators added another mortgage servicing company to an amendment that will compensate eligible homeowners impacted by the foreclosure crisis.
The Federal Reserve Board released an amended enforcement action against GMAC Mortgage Friday, requiring $230 million in cash payments to mortgage borrowers.
The amendment is similar to those announced earlier this year between more than a dozen mortgage servicers, the Office of the Comptroller of the Currency and the Federal Reserve.
Like other institutions, GMAC Mortgage was subject to an enforcements action for deficient practices in mortgage loan servicing and foreclosure processing back in 2011.
The bankruptcy court overseeing the proceedings involving GMAC Mortgage approved the company’s entry into the amended enforcement action. As a result of the amendment, the independent foreclosure reviews will conclude for the GMAC Mortgage borrowers.
Those reviews lasted a little over a year for all servicers who joined the 2011 accord with regulators, but were stopped when the cost breached the $2 billion-mark. Regulators instead opted for new settlements, with large sums going to borrowers who lost homes to foreclosure in 2009 and 2010.
Previously, the OCC and the Fed entered into amendments with Aurora, Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), HSBC (HBC), JPMorgan Chase (JPM), MetLife Bank (MET), Morgan Stanley (MS), PNC Financial (PNC), Sovereign, SunTrust (STI), U.S. Bank (USB) and Wells Fargo (WFC).
With GMAC Mortgage added to the amended enforcement actions, 4.4 million borrowers will receive a total of more than $3.8 billion in cash compensation while an additional $5.8 billion will be provided by the servicers in commitments for loss-mitigation assistance, including loan modifications and forgiveness of deficiency judgments.
The cash payments made by GMAC Mortgage will include a $32 million payment that will satisfy the firm’s obligation to provide loss-mitigation assistance.
"As is the case with the previous amendments, borrowers whose mortgages were serviced by GMAC Mortgage who accept a payment will not be prevented from taking any action related to their foreclosure," said Fed Board members.
They concluded, "Servicers are not permitted to ask borrowers to sign a waiver of any legal claims they may have against their servicer in connection with accepting these payments."
GMAC Mortgage is a subsidiary of ResCap – a firm placed into Ch. 11 bankruptcy by its parent company Ally Financial (ALLY).