4 million Americans eligible for free foreclosure review to find servicer errors
This article first appeared in the St. Louis Beacon, Jan. 12, 2012 - Receiving a letter from the Office of the Comptroller of the Currency could be good news for 4 million Americans who were dealing with home foreclosure in 2009 and 2010: It means they are eligible for free independent reviews of their cases -- and possible financial compensation if their servicers erred in the process.
Such a letter might be the last thing these folks want to deal with after facing the overwhelming and often frustrating foreclosure process, acknowledges Bryan Hubbard, the spokesman for the OCC who's trying to get the word out about the importance of the review for borrowers who meet the program's criteria. But investing an hour or two in filling out the required paperwork could be worth it, particularly since many homeowners are confused by the terminology and fees applied by servicers during foreclosure.
"They don't lose anything by requesting that review, and they may receive compensation for errors and mistakes made in the foreclosure process if those are found during the review," Hubbard said.
On the other hand, a coalition of housing advocates have expressed skepticism over the review process. In testimony before a U.S. Senate subcommittee in December, Alys Cohen of the National Consumer Law Center warned that the process leaves too much control in the hands of mortgage servicers. "Due to the OCC's history of siding with banks over consumers and the potential for homeowner inury, the National Law Consumer Center recommends that the Consumer Financial Protection Bureau take over implementation of the process,'' Cohen said.
Hubbard said the loss-mitigation and foreclosure processes are extremely complicated and can lead to a host of errors.
"The goal is identify what went wrong, fix it and compensate those who were wrongly harmed by those errors," Hubbard said.
Letters to borrowers eligible for reviews have been mailed, and the deadline for filing applications is April 30. Hubbard said reviews could take several months depending on how many people request them.
The OCC took enforcement action last April against large national bank mortgage servicers -- the ones with household names -- for unsafe and unsound practices in mortgage servicing and foreclosure processing, Hubbard said. The OCC required servicers to fix errors and also to retain independent consultants to conduct comprehensive reviews of their foreclosure activity in 2009 and 2010.
The OCC action is independent of the ongoing investigation by state attorneys general. The OCC acted in response to examinations conducted in the fourth quarter of 2010 by bank examiners from the OCC, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC). While the OCC reviews do address the robo-signing of foreclosure documents, the investigations are broader in scope, Hubbard said.
The reviewers will follow a three-step investigation to:
- Determine whether errors, misrepresentations or other deficiencies occurred during foreclosure actions in 2009 and 1010. Borrowers didn't have to lose their homes; they qualify if they were in any stage of foreclosure.
- Determine whether errors resulted in financial injury to the borrowers.
- Determine the appropriate remediation for those injuries.
Financial injury might be determined by a number of reasons, including:
- Incorrect fees or mortgage balances at the time of foreclosure.
- Borrowers were meeting their obligations during a modification agreement, but a foreclosure sale was scheduled anyway.
- The borrower was protected by bankruptcy.
- The borrower was a military member and protected by the Servicemembers Civil Relief Act.
Servicers are required to pay for the reviews and also for remediation determined by the reviewers. Regulators from the OCC and the Federal Reserve will oversee remediation rewards, Hubbard said.
The OCC is launching a national campaign, funded by servicers, to inform borrowers about the Independent Foreclosure Reviews, he added.
"We can't tell you with certainty that a borrower will or will not receive compensation until the review is conducted," Hubbard said. "We can't estimate the size of the compensation until the facts of the case get reviewed. But we can be certain that if a person doesn't participate they are less likely to receive compensation."
In her testimony before the Senate, Cohen called the review process "window dressing" and expressed concerns that the program is too limiting and gives mortgage servicers a chance to strip homeowners of their legal rights.
Hubbard said that borrowers are free to pursue other actions against servicers, even if they request reviews.
"You don't relinquish any rights by requesting a review," he said.
Are You One of the 4 Million?
Eligible borrowers who have questions or did not receive a letter about the Independent Foreclosure Review from the Office of the Comptroller of the Currency can call 888-952-9105 or visit the OCC websiteor the Independent Foreclosure Review website. Eligible borrowers are those who were involved in a foreclosure action in 2009 or 2010 handled by one of the following servicers:
- America's Servicing Company
- Aurora Loan Services
- BAC Home Loans Servicing
- Bank of America
- Citibank, CitiFinancial, CitiMortgage
- EverBank/Everhome Mortgage
- Financial Freedom
- GMAC Mortgage
- IndyMac Mortgage Services
- MetLife Bank
- National City Mortgage
- PNC Mortgage
- Sovereign Bank
- SunTrust Mortgage
- U.S. Bank
- Wachovia Mortgage
- Washington Mutual (WaMu)
- Wells Fargo Bank
- Wilshire Credit Corporation