RED BAR

BLUE BAR

Modification request approved ($300-$500)

Modification request denied ($1,000-$6,000)

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Modification request received but no underwriting decision made ($400-$800)

Servicer did not engage with borrower in a loan modification or other loss mitigation action ($300-$600)

Other loans ($300-$500)

Other Loans ($3,000-$125,000)

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With the exception of the “Other” categories, this chart uses regulators’ precise wording. They have offered no more description of exactly what situations fall into which categories. The “Other ($3,000 & Up)” category comprises a number of others. For the full list of categories, see the chart regulators released. Source: OCC, Federal Reserve

Most borrowers will receive little. To be eligible, a borrower must have been in some stage of the foreclosure process at any time in 2009 or 2010 and had their loan handled by one of the major banks covered by the agreement. That’s about four million borrowers. Most of them, about 2.4 million, will receive $300.

Borrowers who took the time to fill out a complaint about their bank receive a small bonus for their efforts: Most of them will get $500 or $600. Only about 11 percent of eligible borrowers filled out complaints, a low response rate both consumer advocates and the Government Accountability Office attributed to borrower confusion and poor outreach by regulators and the banks.

Typical of the subpar communication regulators and banks have had with homeowners, it will be hard for homeowners to divine why they were put into a certain category.

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Many borrowers facing foreclosure dealt with their servicer over months or years, and the errors were legion. Borrowers will likely argue they could be put in several of the regulators’ categories. It was common, for instance, for borrowers to be rejected over and over again for a modification before receiving one. Does that mean such a borrower will be receive a payment based on the denials or the approval? OCC officials have said that borrowers who fit in multiple categories will receive a payment based on whichever category brings the highest payment.

It’s also hard to understand some of the differences in payments. In some instances, homeowners who ultimately lost their home are compensated the same as those who did not. In other cases, they reap far more.

At least 1.6 million, or 41 percent of the total pool of homeowners, ended up losing their homes. The data is based on information as of the end of 2011, so the actual number is likely higher, because it doesn’t account for foreclosures in 2012.

Another example of the confusion: The categories are broken down into types of “possible servicer error,” but all possible servicer errors are not created equal in regulators’ eyes. For instance, a borrower who was denied a loan modification and lost her home to foreclosure (a pool of about 370,000 borrowers) will receive $3,000 or $6,000, depending on whether she submitted a complaint. But in cases where the borrower applied for a modification, and the servicer never made a decision and then foreclosed (196,000 borrowers), the payment could range from $400 to $800. If the servicer never even began the modification process and foreclosed (568,000 borrowers), the payment ranges from $300 to $600.

Asked for the rationale behind these decisions, an OCC official explained that regulators deemed the potential for error higher in cases where the servicer actually denied a request. It’s possible, for instance, that a servicer never made a decision because the borrower did not send in the proper documents. Or maybe the borrower never responded to the servicer’s solicitations.

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Borrowers waiting for their checks can only hope they suffered the right sort of servicer error.

“People who managed to get far enough along in the [modification] process, many of them will get a decent payment,” said Alys Cohen of the National Consumer Law Center. “But people who suffered servicer neglect clearly are not getting compensation for the harm they suffered.”

Regulators say the first checks will be sent to borrowers at the end of this week, and that almost all payments will have been sent out by the end of April.

Meanwhile, homeowners, let us know what you get in the mail and whether you think you’re in the right category.

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