Bankrupt mortgage giant to shell out $230m to borrowers

by Adam Smith29 Jul 2013

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.

COMMENTS

  • by Jim the Mortgage Man | 7/29/2013 12:11:49 PM

    So let me get this straight, those individuals who were/are delinquent in their obligation get rewarded and those of us who struggle, sacrifice, and compromise, to fulfill our obligation get penalized... Only in America... And tell me you didn't see this coming some 5+ years ago... Just like those Mortgage CEOS who never imagined a correction/implosion in the housing market... Like the song says: Meet the new boss, same as the old boss, WE WON'T GET FOOLED AGAIN ! HARDLY...

  • by Tammy Buczynski | 11/6/2013 7:57:01 PM

    GMAC continued billing me on 2nd mortgage for more than 7 yeard after I filed bankruptcy. I did not know 2nd mortgage was discharged in bankruptcy. I also did not know that per government they can not bill you on 2nd mortgage. Now the mortgages have been transferred to Ocwen which is GMAC under different name. It would be nice if we the tax payers could just change our names to get out from under our responsibilities.

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