The Federal Reserve Board (FRB) has released an amendment to the enforcement action against GMAC Mortgage requiring approximately $230 million in cash payments to mortgage borrowers. The amendment is similar to those announced in early 2013 between 13 mortgage servicing companies and the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board. Like the other institutions, GMAC Mortgage was subject to an enforcement action for deficient practices in mortgage loan servicing and foreclosure processing.
More than 232,000 borrowers whose homes were in any stage of foreclosure in 2009 and 2010 with GMAC Mortgage will receive cash compensation under the amendment. Information about payments to borrowers whose mortgages were serviced by GMAC Mortgage will be announced in the near future.
The bankruptcy court that is overseeing the bankruptcy proceedings involving GMAC Mortgage approved GMAC Mortgage's entry into the amended enforcement action Friday. As a result of this amendment, the independent foreclosure reviews will conclude for GMAC Mortgage borrowers.
Previously, the OCC and the Federal Reserve entered into amendments with Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. With the addition of GMAC Mortgage, approximately 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, such as loan modifications and forgiveness of deficiency judgments.
The $230 million to be paid by GMAC Mortgage includes $32 million that will satisfy GMAC Mortgage's obligation to provide loss-mitigation assistance. GMAC Mortgage will satisfy its requirement for loss-mitigation assistance with direct borrower payments because it no longer owns a significant residential mortgaging portfolio.
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. 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. In addition, the servicer's internal complaint process will remain available to borrowers.
Federal Reserve examiners continue to closely monitor the servicers' implementation of plans required by the enforcement actions previously issued against the servicers to correct the unsafe and unsound mortgage servicing and foreclosure practices.