When the rest of the banks settled with the OCC and began sending out rubber
checks, Ally/ResCap decided to continue its portion of the Independent
Forbes is reporting that ResCap has now opted to settle with the OCC instead of continue the
IFR any longer.
ResCap has filed a term sheet with the U.S. Bankruptcy Court for the Southern
District of New York. This term sheet sets aside $230 million into an
escrow account. The escrow account is to be used for cash payouts to qualifying
homeowners whose foreclosure files were subject to the IFR. The distributions
are to take place according to the same pay schedule used for other IFR
payouts. Rust Consulting of bounced-check fame have the honor of distributing
the funds. Let's hope that they put the money in the right checking
account this time.
Perhaps more interesting is just how much money the IFR was costing ResCap.
While we got some vague cost numbers from the initial IFR settlement debacle,
ResCap's disclosures to the bankruptcy court demonstrate a billing
process that has gone way over budget. When ResCap filed bankrupcty, it
stated that the IFR process had cost approximately $180 million. By August
of 2012, that figure had risen to $250 million. As of June 26, 2013, ResCap
had estimated that the cost could balloon to somewhere between $415 to
According to documents filed in the Chapter 11 case, ResCap has been paying
Pricewaterhouse Coopers $300,000 per day to perform the review. Approximately
28,000 loan files are part of ResCap's portion of the IFR. Given that
the work is not yet complete, one has to wonder how many files have been
reviewed so far. What is the cost per file per day? Is this just a massive
payday for PwC?
In any event, homeowners whose mortgages were serviced by GMAC/Ally/ResCap
in 2009 and 2010 may want to be on the lookout for communications regarding
this settlement -- ResCap is to assign borrowers to payment categories
within 45 days of signing the term sheet. Checks should follow shortly
thereafter -- I will also update the blog when I hear any news.