Foreclosure Settlement Kicks In With Claims Launch

NEW YORK (TheStreet) -- Several Attorneys General offices have issued notices to borrowers who were wrongfully foreclosed upon between 2008 and 2011 to expect claim forms for possible compensation under the $25 billion national mortgage settlement.

The settlement inked with the nation's biggest mortgage servicers set aside $1.5 billion in payments to borrowers nationwide.

Eligible borrowers are those whose mortgages are serviced by Ally Financial, Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC).

Nearly 2 million borrowers could be eligible under the settlement. The amount paid to borrowers depends on the number of eligible borrowers who apply. Borrowers who participate may continue to pursue legal remedies with banks independently.

The application for a claim is free. California Attorney General Kamala Harris warned borrowers of settlement-related scams. The claim form is just one page and asks no personal financial information. Borrowers should beware of any calls offering assistance in the claim process.

The deadline for submission of claim forms is Jan. 18, 2013. Checks are expected to be mailed by mid 2013.

Borrowers can contact the national mortgage settlement administrator's office for further details and questions.

Separately, New York Attorney General Eric Schneiderman announced on Tuesday $20 million in funding housing and legal counseling services to struggling New York homeowners. The announcement is part of a three-year $60-million commitment that is being funded out of the proceeds of the national mortgage settlement.

"The rise in foreclosures in New York State is troubling, but this isn't just a matter of numbers: each foreclosure represents a devastating loss for a family and a community. This program puts homeowners first, and these organizations will help get our neighborhoods back on track," said Attorney General Schneiderman in a statement.

-- Written by Shanthi Bharatwaj in New York.

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