It is not exactly the down payment on a dream house, but about 11,000 former Massachusetts homeowners who lost their properties to foreclosure will soon receive checks for about $1,480 as part of a mortgage settlement with the nation’s largest lenders.
Attorney General Martha Coakley said Tuesday that the total payout of nearly $16 million — to be made between June 10 and 17 — will come from last year’s deal between the lenders and state attorneys general nationwide over charges of sloppy and fraudulent foreclosure practices.
“These Massachusetts homeowners are being compensated for the banks’ rush to foreclosure, unlawful robo-signing of documents, and a failure to determine whether a loan modification was even possible,’’ Coakley said in a statement. “This is important and direct relief for thousands of Massachusetts borrowers.”
The relatively modest settlement checks come more than a year after Coakley joined 49 state attorneys general to announce a $26 billion pact with Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citibank, and Ally Financial Inc., formerly GMAC.
A much larger portion of the funding dictated by the deal — more than $637 million to date — has been funneled to struggling Massachusetts homeowners in the form of loan modifications, mortgage principal reductions, and short-sale assistance, according to preliminary data provided by lenders.
Housing advocates said Tuesday that the checks do not come close to compensating for the pain suffered by tens of thousands of borrowers who were victims of predatory loans and who had their properties unlawfully seized by lenders. More than 40,000 Massachusetts borrowers lost their properties to foreclosure between 2008 and 2011, according to Warren Group, a company that tracks local real estate.
“In Massachusetts, $1,500 gives you a little over one month’s rent,’’ said Grace Ross, coordinator for the Massachusetts Alliance Against Predatory Lending, a nonprofit advocacy group. “It is so woefully inadequate.”
Yet some borrowers who receive checks over the next week might not be deserving of any compensation. To be eligible for a payment, borrowers simply had to file a claim showing their home mortgages were serviced by one of the five banks and that their property was taken by foreclosure between Jan. 1, 2008, and Dec. 31, 2011. About 58 percent of eligible borrowers in Massachusetts filed claims, according to the state.
Across the United States, 962,278 borrowers will receive checks, the state said.
Those with questions about the process can call the settlement administrator at 866-430-8358.
In addition to financial relief, the settlement required lenders to make improvements in the way they service loans. Last month, Coakley complained that banks were violating that part of the agreement — including by failing to offer assistance in a timely fashion, sending borrowers inaccurate and confusing information, or denying customers help without explaining why they were rejected.
Joseph A. Smith Jr., the North Carolina-based monitor charged with overseeing the national accord, is expected to submit a report this month addressing those issues.Jenifer B. McKim can be reached at email@example.com. Follow her on Twitter @jbmckim.