Millions of current and former homeowners will have an opportunity to have their foreclosure cases examined to determine whether they should be compensated for banks’ mistakes. A sweeping review of how mortgage loans for homes going through foreclosure have been managed over the past couple of years is being planned by federal regulators, according to a recent Wall Street Journal story.
Regulators to Initiate Reviews of 2009 and 2010 Foreclosures
The Office of the Comptroller of the Currency (OCC) is initiating a review process that will be open to borrowers who were in some state of foreclosure in 2009 and 2010–a time when many were harmed by lender improprieties such as robo-signing documents to speed up the eviction process.
John Walsh, acting head of the OCC, unveiled some aspects of the planned review in a speech last month to banking executives. In the speech, he said the agency was exploring “the best means of ensuring that injured homeowners had the opportunity to seek relief.”
The OCC says it will oversee the process, which could be unveiled as soon as the next few weeks. Currently, regulators estimate 4.5 million borrowers could be eligible for review.
Possible Borrower Compensation Not Yet Revealed
The OCC is expected to establish a broad public-outreach campaign that will include direct mail to eligible borrowers and a single website and toll-free number to help others determine eligibility.
The reviews are to be conducted by independent third-part companies and are separate from the months-long talks between state prosecutors and banks to reach a multibillion-dollar settlement over foreclosure abuses.
Regulators haven’t estimated the compensation that could be available to borrowers who are determined to have suffered “financial injury” (including miscalculated mortgage payments, impermissible fees or penalties, force placed insurance and foreclosures initiated while payments were being made), as this determination would be made on a case-by-cases basis by the third-party firms.
Borrowers will be responsible for requesting reviews before a cutoff date that is likely to fall near the end of the first quarter of 2012.
[...] early October, the Wall Street Journal reported that government officials planned to order foreclosure reviews of approximately 4 million foreclosures that occurred between 2009 and 2010 to determine if [...]