Borrowers potentially harmed by foreclosures initiated by Goldman Sachs through its former Litton Loan Servicing subsidiary and Morgan Stanley through Saxon Mortgage Services will be compensated for their losses in the near future, the Federal Reserve said Monday.
Both of the companies were at one time servicing units for the two investment banks.
As part of the massive $9.3 billion mortgage servicing agreement with regulators, payouts from the two firms are expected to hit the mail this week, totaling $247 million. Borrowers receiving compensation faced foreclosure proceedings sometime back in 2009 and 2010.
Payments will range anywhere from $300 to $125,000 and are expected to arrive just days after the Office of the Comptroller of the Currency announced a massive mailing of foreclosure settlement checks totaling more than $3 billion to compensate borrowers harmed by other servicers.
A little over a $1 billion in checks have been cashed.
Rust Consulting, the firm handling the payout, said some borrowers could receive letters requesting additional information before a check is even sent.
“As in the case of the other servicers, payment amounts for borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley were determined after categorizing borrowers according to the stage of the foreclosure process and the type of possible servicer error,” the Federal Reserve said.
The Fed notes borrowers serviced by the two investment banks were not able to request a review of their foreclosure files, so the amounts in the payout differ when compared to other servicers.
“Borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley who accept a payment will not be prevented from taking any action related to their foreclosure,” the Fed said.
“Servicers are not permitted to ask borrowers, in connection with accepting these payments, to sign a waiver of any legal claims they may have against their servicer.”