Goldman Sachs (GS:US) Group Inc. and Morgan Stanley (MS:US) will start sending checks to borrowers foreclosed on by the banks’ former mortgage-servicing units this week, according to the Federal Reserve.
The two New York-based banks will pay $247 million to almost 224,000 borrowers, the Fed said today in a statement. The checks -- meant to compensate borrowers who may have been mistreated in foreclosures during 2009 and 2010 that relied on improper documentation or faulty procedures -- range from $300 to $125,000, depending on the how much harm may have been done.
Mortgage units owned by Goldman Sachs and Morgan Stanley foreclosed on homes of 49 military members eligible for borrower protections and three homeowners who weren’t in default, the Fed said. The loans were handled by Goldman Sachs’s Litton Loan Servicing LP and Morgan Stanley’s Saxon Mortgage Services Inc., both of which were sold to Ocwen Financial Corp. (OCN:US)
The Wall Street firms were among 13 of the largest U.S. mortgage servicers who agreed to a $9.3 billion settlement with federal regulators that called for a total of $3.6 billion in cash payments to borrowers and that the rest go to help prevent future foreclosures. All borrowers targeted by foreclosure in 2009 and 2010 are scheduled to get some payment, whether or not they were harmed by the banks.
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