A bankrupt former mortgage giant will have to pay $230m to borrowers in an enforcement action by the Fed.
The Federal Reserve Board on Friday amended an enforcement action from earlier this year, announcing that it will require GMAC Mortgage, which entered bankruptcy last year, to make approximately $230m in cash payments to mortgage borrowers. The Federal Reserve said the enforcement action was due to "deficient practices in mortgage loan servicing and foreclosure processing".
The amendment will see payouts to more than 232,000 borrowers whose homes were in any stage of foreclosure in 2009 and 2010 with GMAC. As a result of the amendment, which was approved by the bankruptcy court overseeing bankruptcy proceedings involving GMAC, independent foreclosure reviews on GMAC borrowers will be halted.
The Federal Reserve Board said accepting a payment will not preclude borrowers from taking action related to their foreclosures, noting that servicers are not permitted to ask borrowers to sign a waiver of any legal claims they may have against a servicer.