Mortgage settlement checks were paid to qualifying individuals under the National Mortgage Settlement of 2012, according to Nolo. The settlement required that certain lenders provide relief to borrowers because of legal misconduct in the way that mortgage foreclosure activities and other procedures were handled by the lenders.
Some of these activities included robo-signing, flawed notarization of legal documents and deceitful activities regarding loan modification procedures, as reported by Nolo. Robo-signing involves the signing of legal documents by individuals employed by the lender who have no idea whether the information contained in the documents is accurate. Fraudulent practices in loan modification and foreclosure procedures included the practice of telling borrowers that their loans were in the process of being modified while the lenders simultaneously pursued foreclosure activities.
Some of the lenders involved included Ally/GMAC, Bank of America, Citi, JP Morgan Chase and Wells Fargo, notes Nolo. The settlement held these institutions partly accountable for the mortgage crisis that heralded the national financial crisis in 2008. The settlement provided for approximately $25 billion in relief for current and former homeowners. Some of this relief was in mortgage settlement checks. Other types of relief included loan modifications and the refinancing of homes that resulted in more debt than equity.