When The Government Accountability Office released the results of its study of the Independent Foreclosure Review, it didn’t look particularly good for the IFR. The GAO found that the process undertaken by the Office of the Comptroller of the Currency and the Federal Reserve to provide foreclosure assistance to distressed borrowers was lacking in oversight and transparency. The GAO's report can be read here.
In 2013, the OCC and Fed signed consent orders with 16 mortgage servicers that required the servicers to provide $3.9 billion in payments to 4.4 million borrowers and $6 billion in foreclosure prevention actions.
The IFR review was met with criticism from Congresswoman Maxine Waters, D-Calif.,Ranking Member of the House Financial Services Committee. Waters said that the OCC and Fed “used a nonsensical crediting system for the largest portion of the settlement,” which was designed to provide foreclosure relief. That isn't the first time that the the IFR has been under fire. Previously, the entire settlement process faced controversy, as critics called the IFR cumbersome and costly.
On Wednesday, the OCC released a status update on how much of that $3.9 billion payback fund has actually been paid out, and how much of the $6 billion in foreclosure prevention actions has been collected by the government.
According to the OCC, Qualified Settlement Fund 1 had disbursed 3,948,415 checks to distressed borrowers, totaling $3,385,814,432, as of January 24, 2014. Of those checks, 3,280,458 (83%), totaling $2,903,932,623 (86%), have been cashed or deposited as of April 8, 2014.
The Qualified Settlement Fund 1 is managed by the OCC and consists of payments from Aurora, Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust (regulated by the Federal Reserve Board), U.S. Bank, and Wells Fargo.
The list of total scheduled repayments from the affected servicers can be seen below.
Aurora, EverBank, GMAC Mortgage, MetLife, Morgan Stanley and PNC were originally required to pay $799 million collectively for foreclosure prevention assistance. According to the OCC report, the six servicers met those obligations by paying $92 million collectively to the qualified settlement funds or HUD-approved nonprofit organizations that provide borrower counseling or education.
Of that $92 million, $63 million went to the qualified settlement funds and $29 million went to HUD-approved borrower counseling and education.
Bank of America, Citibank, HSBC, JPMorgan Chase, Sovereign, U.S. Bank, and Wells Fargo submitted foreclosure prevention assistance activities for credit under the amended consent orders on 16,362 mortgages with a total unpaid balance of $4,045,726,584 through January 24, 2014.
There are three other qualified settlement funds. The Fed manages Qualified Settlement Fund 2, made up of payments from Goldman Sachs and Morgan Stanley, and Qualified Settlement Fund 3, made up of payments from GMAC Mortgage.
The OCC also manages Qualified Settlement Fund 4, which is made up of payments from EverBank and will begin payments in the second quarter of 2014.