The $26 billion mortgage settlement agreed to by the five mortgage servicers and government negotiators received massive news coverage from all the major media outlets. However, a resolution reached in April 2011, between federal officials and 14 mortgage servicers did not receive as much publicity.
The Independent Foreclosure Review agreement awards financial compensation to aggrieved homeowners who suffered unfair foreclosures practices. Some people lost their homes; other borrowers still reside in the residences.
Federal regulators, which include the Office of the Comptroller of the Currency (OCC), secured the services of independent auditors to evaluate 4.3 million foreclosure cases and identify abusive foreclosure practices.
It presents an option for even greater compensation than the recent mortgage settlement.
However, borrowers must request a case review.
This agreement covers foreclosures that occurred between January 1, 2009 and December 31, 2010. Since the original announcement, the number of servicers has grown to 27 entities.
Here is the list:
- America’s Servicing Co.
- Aurora Loan Services
- BAC Home Loans Servicing
- Bank of America
- EverBank or EverHome Mortgage Company
- 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 or WaMu
- Wells Fargo Bank, N.A.
- Wilshire Credit Corporation
The faulty foreclosure procedures used by mortgage servicers included false signatures, misrepresentations in paperwork and foreclosure on borrowers undergoing mortgage modifications.
Only 90,000 Cases Reviews
A federal regulator-approved auditor investigates each file it receives file to determine how the mortgage servicer handled the foreclosure. Mortgage servicers must pay for the independent consultants. The Office of the Controller and Federal Reserve Board has the responsibility of administering and monitoring the review process.
As part of the settlement, mortgage servicers had to mail letters to potential victims, which apprise them of the free review and what steps to take to initiate the claims process.
The letter sent to homeowners includes a document, which contains 13 questions. Borrowers must provide answers that explain how the foreclosure proceedings harmed them.
Many housing advocates believe the entire process needs more transparency. They have also expressed concern about the inability of servicers to notify many people who are entitled to compensation, but lost their homes and have moved away.
According to National Fair Housing Alliance spokesperson Deborah Goldberg, many people probably through the letter in the garbage because they appeared too similar to letters received from “loan scamming companies.”
Of the 4.3 million foreclosure cases eligible for reviews, only 90,000 homeowners have filed a claim. This lack of response has prompted the regulators to extend the original April 30, 2012 deadline to July 31, 2012.
The amount of compensation a borrower receives from this settlement depends on the circumstances surrounding the foreclosure.
For example, some borrowers may receive compensation for improper fees. Homeowners who suffer greater financial harm could receive an award large enough to help regain a home loss to foreclosure. The total amount of the award will only come after the claim has expired and the last case resolved.
Foreclosed Homeowners Can Double Up Claims
According to Bryan Hubbard spokesperson for the OCC, people did not have to lose their home to foreclosure to receive compensation as part of this agreement. Any borrower who sustains financial damage as part of mistakes in the foreclosure process can ask for compensation.
Examples of financial injuries to borrowers include:
- Possess a mortgage modification agreement, but was foreclosed on by the servicer.
- Borrower protected by the federal bankruptcy court, but suffered foreclosure.
- Faulty mortgage payment calculations made by the servicer.
- Servicer calculated, applied or processed fees inappropriately.
- Requested a mortgage modification and submitted the necessary documentation by the deadline, but the servicer foreclosed while the borrower awaited a decision.
The Independent Foreclosure settlement works completely independent of the $26 billion settlement reach by the federal government and state attorneys general with Citigroup, JP Morgan Chase, Bank of America, Ally Financial and Wells Fargo.
Therefore, borrowers who can meet the eligibility requirements can file the necessary claims and collect compensation from both funds.
How to File Your Settlement Claims
Remember, you need to file a separate claim for each settlement agreement.
1) Go to the Independent Foreclosure Review website at “independentforeclosurereview.com” complete the form, which documents how they experienced financial repercussions due to the foreclosure process. Although some cases might require borrowers to submit information and paperwork, auditors will obtain the records its needs from loan servicers
2) The attorneys general office for each state will administer its portion of the $26 billion AG settlement. Contact your state attorneys general office or loan servicer for details on how to submit a claim. Officials expect the process of tabulating a list of eligible borrowers to take as long as 180 days. The claim process will remain open for about three years.