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OCC's Escheatment and the Federal Reserves’ Redistribution

In May/June 2016, approximately $273 million was escheated to 54 US state/territory jurisdictions, which reflects the uncashed IFR Payment Agreement payments to approximately 450,000 borrowers of OCC-supervised servicers, which included uncashed payments to 46 military borrowers entitled to payments for violation of the SCRA totaling nearly $3 million. Uncashed payments were sent to the state of the borrower’s last known address. There is no time limit for OCC borrowers to claim the escheated funds from the state of the borrower’s last known address and the escheated funds can be claimed by a deceased borrower’s heirs pursuant to the states’ redemption requirements.

For borrowers of Aurora, Bank of America, Citibank, EverBank, MetLife Bank, PNC, Sovereign also known as Santander, U.S. Bank, or Wells Fargo, and certain borrowers of HSBC and JPMC, please call the paying agent (Rust Consulting) at 1-888-952-9105 to confirm the state your uncashed payment was sent. For EverBank borrowers, please call the paying agent (Epiq Systems) at 1-877-819-9754 to confirm the state your uncashed payment was sent.

In August 2016, approximately 650,000 payments totaling approximately $80 million will be mailed to borrowers of Federal Reserve Board (FRB) regulated servicers who cashed or deposited payments from the Independent Foreclosure Review Payment Agreement between April 12, 2013, and March 31, 2016, and whose mortgage loans were serviced by Litton (also known as Goldman Sachs) GMAC, HSBC, JPMC, Saxon (also known as Morgan Stanley) or SunTrust. This payment represents a redistribution of all uncashed payments to FRB borrowers from the original Independent Foreclosure Review Payment Agreement to FRB borrowers who cashed their checks.

Why did the OCC elect to escheat uncashed payments and not redistribute the uncashed payments to borrowers who cashed their IFR Payment Agreement payment like the FRB did?

The OCC determined that uncashed payments for borrowers of OCC-regulated servicers should remain available to such borrowers, or such borrowers’ rightful heirs, through the states’ escheatment processes if, for any reason, they were not able to cash their check via the IFR process.

Who is receiving a Redistribution payment?

Any borrower of an FRB-regulated servicer who previously received and cashed or deposited a payment as a result of the 2013 agreement between the FRB and either Litton (also known as Goldman Sachs), GMAC, Saxon (also known as Morgan Stanley), SunTrust Bank, and certain borrowers of HSBC and JPMC, in the Independent Foreclosure Review program.

What is the Payment for?

In November 2015, the FRB announced a plan to complete the process of issuing payments to borrowers of Federal Reserve-regulated servicers and to redistribute unclaimed funds under the Independent Foreclosure Review Payment Agreement to eligible FRB borrowers who cashed or deposited checks. FRB staff directed the Paying Agent (Rust) to redistribute the remaining funds evenly among borrowers of FRB-regulated servicers who cashed or deposited their original checks by March 31, 2016.

If the initial payment was cashed or deposited by March 31, 2016, and the servicer was regulated by the FRB, the borrower is eligible to receive this additional payment.

Which Servicers are involved in the Redistribution Process?

Only borrowers whose loans are/were with servicers regulated by the FRB are eligible for the Redistribution. That includes loans serviced by: GMAC, SunTrust, Saxon (also known as Morgan Stanley), Litton (also known as Goldman Sachs), as well as some (but not all) of the loans serviced by HSBC and JPMC.

Loans regulated by the OCC are not eligible for redistribution as all uncashed checks for borrowers of OCC-regulated servicers were escheated to the states on behalf of the borrowers. If a loan was serviced by Aurora, Bank of America, Citibank, EverBank, MetLife Bank, PNC, Sovereign also known as Santander, U.S. Bank, or Wells Fargo and certain of their affiliates or acquired loan servicing companies, it is not eligible for redistribution, as well as some (but not all) of the loans serviced by HSBC and JPMC.

My loan was serviced by HSBC [or JPMC], why didn’t I receive a payment?

HSBC and JPMC have loans that are regulated by either the FRB or the OCC, depending on the loan portfolio. If a loan was regulated by the OCC, it is not eligible to participate in the Redistribution. All payments for borrowers of OCC-regulated servicers have been sent, and, if not cashed or deposited, were escheated (or will be) to the state of the borrower’s last known address. There is no time limit for borrowers of OCC-regulated servicers to claim the escheated funds from the state of the borrower’s last known address.

If the FRB borrower doesn’t cash their check by the deadline, what happens to this money?

That is up to the FRB to decide.

How was the payment amount determined?

The payment amount was determined and authorized by the FRB. The amount is the result of taking all the uncashed checks from the initial FRB distribution and dividing that amount among the loans where borrowers of FRB-regulated servicers cashed or deposited their original check. Every eligible loan will receive $124.30. So, if two or more borrowers split their original payment, they each will receive an equitable portion of the $124.30. The amount of the original IFR payment has no bearing on the calculation for the Redistribution payment to the borrowers of FRB-regulated servicers. [Note: It was approximately $80 million divided by 645,000 loans.]