Back in January, Goldman Sachs and Morgan Stanley announced a $557 million settlement “for deficient practices in mortgage loan servicing and foreclosure processing.” Later this week, the chunk of that money earmarked for payouts to affected consumers will be going out in the mail.

The payments will be sent out to people whose home loans were serviced by former Goldman subsidiary Litton Loan Servicing or Saxon Mortgage Services, formerly under the Morgan Stanley umbrella.

Along with 11 other services, these companies were accused of running roughshod over the foreclosure process, hiring so-called “robosigners” who rubber-stamped documents without review or without understanding what was being signed.

In 2010, one Litton foreclosure supervisor admitted in a deposition that she couldn’t define basic terms like “promissory note,” “mortgagee,” “lien,” “receiver,” or “defendant.”

Payments will go out starting Friday, and continuing through the summer, to more than 220,000 borrowers whose homes were in foreclosure in 2009 and 2010 with either Litton or Saxon. Depending on the severity of the case, the compensation will range anywhere from hundreds of dollars up to $125,000.

In total, the 13 servicers have agreed to pay out $3.6 billion to more than 4.2 million affected borrowers. Goldman and Morgan Stanley were the last of the 13 to settle with the Federal Reserve; the other servicers began sending out payments earlier this month.

Let’s just hope these checks don’t bounce like some of the ones sent out to earlier payees.

Those eligible for payments under the settlement should already have received notification postcards from Rust Consulting Inc., the company handling the payments. Some borrowers may be required to provide additional information before they can receive their check.

[via Chicago Tribune]

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