Homeowners, who were victims of foreclosure abuses between 2009 and 2010, may be eligible to claim over $125,000 from lenders as part of an Independent Foreclosure Review that is being overseen by two government agencies.
Banking regulators unveiled a plan Thursday to compensate borrowers for a wide variety of errors, including starting foreclosure for a borrower who wasn't in default, denying loan assistance in error, making a mistake on a loan modification and wrongfully foreclosing on a member of the military.
The Office of the Comptroller of the Currency (OCC) and the Federal Reserve laid out the framework in which borrowers will receive compensation for a wide range of foreclosure abuses and errors that occurred as a result of robo-signing.
As part of an enforcement action by the agencies last April, 14 mortgage servicers, including Bank of America, Chase, Citibank, HSBC, MetLife Bank, PNC Mortgage and Wells Fargo, agreed to hire independent consultants to investigate foreclosure abuses and compensate those who suffered financial harm.
Many borrowers with foreclosure errors may not see any money. Only about 194,000 of 4.4 million borrowers sent letters last year have requested a review of their cases to date. Separately, independent consultants are doing reviews of about 145,000 consumers' files, according to a report by the Wall Street Journal.
The Independent Foreclosure Review, which is being carried out on a federal level, has gotten far less attention. So far, only a fraction of the 4.4 million borrowers potentially eligible for review have responded to solicitation letters sent out by the banks informing them that they are eligible for a review by an independent consultant and may be compensated.
As of May 31, only about 340,000 cases were slated for review, according to a progress report released Thursday by the Fed and the OCC.
As a result, the agencies have extended the deadline to apply for a review by two months to September 30 from July 31.
The foreclosure review compensates borrowers for everything from being charged the wrong fee to being wrongfully foreclosed upon.
