In 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 homeowners should be compensated for lenders’ misconduct. According to the Office of the Comptroller of the Currency (OCC), the speculations were true and mortgage servicers will begin reviewing cases immediately.
Homeowner Foreclosure Cases Under Review This Month
According to the OCC, mortgage servicers have been ordered to offer case reviews for up to 4 million foreclosures that may have been initiated without undergoing the proper procedures, which include presenting courts with sworn affidavits verified by a notary public.
Government officials are now asking servicers, which include Citibank, Bank of America, Wells Fargo and JPMorgan Chase, to send out letters to homeowners who may have been victims of this illegal act known as robo-signing.
The letters are set to go out this month, asking borrowers if they would like their foreclosure cases reviewed as soon as possible.
Mortgage Lenders to Determine Compensation Eligibility and Amounts
As required by the OCC, mortgage lenders will be required to pay homeowners when a “borrower suffered financial injury.” This financial injury, as well as how much a borrower is to be compensated, will be determined by the lender, not the government agency.
Some are criticizing the OCC for being too lenient on the banks, stating that it is inappropriate for lenders to be able to review their own potential mistakes. ”Servicers have a poor performance track record in effectively engaging with borrowers, and in the claims process, have a natural disincentive to reach the households their practices have harmed,” wrote Rep. Maxine Waters (D-Calif.) in a letter to regulators.
To address criticism, regulators say independent consultants will review the cases to ensure banks are following the procedures. If it appears mortgage lenders are attempting to dodge blame, they will be subject to additional regulatory reviews.
The other lenders and service providers cited by regulators include Ally Financial Inc., Aurora Bank, EverBank, HSBC, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Banks, U.S. Bank, Lender Processing Services and MER-SCORP.
Homeowners who believe they are eligible for forclosure review can also call 888-925-9015 or visit Independent Foreclosure Review for more information. All requests to review specific foreclosure cases must be received by April 30, 2012.
