It's late, and it's limited, but for borrowers who feel their homes were wrongly or inappropriately foreclosed upon in 2009 and 2010, there is now recourse.
As part of a larger enforcement action (so-called "consent orders") taken last April against fourteen of the nation's largest mortgage banks/servicers following the so-called "robo-signing" scandal, the Office of the Comptroller of the Currency is beginning a "multi-faceted independent review of foreclosure actions."
The major banks, including Bank of America , Chase , Citibank , Wells Fargo , GMAC, and EMC, will have to fund these independent reviews to evaluate, "whether borrowers suffered financial injury through errors, misrepresentations, or other deficiencies in foreclosure practices." If they did, those borrowers get some kind of "remediation."
“The challenge is substantial, but the steps we have required the servicers to take are vitally important to resolving these issues in a way that respects the rights of those who have been harmed and helps to restore confidence in the system,” said John Walsh, Comptroller of the Currency in a statement.
The major mortgage servicers began sending out letters to eligible borrowers today to explain the process. The requests for the reviews must be received by April 30, 2012. So how many do they expect will request these reviews, given that there are potentially four and a quarter million eligible borrowers according to the OCC?
"It could be hundreds of thousands," Walsh told me in an interview this morning. "We are certainly hopeful they will have the capacity to handle it," he added with regards to the servicers. Walsh also admitted that if the volumes are very high, it could have an impact on the current foreclosure process at major servicers, "to the extent that capacity that servicers have that they'd otherwise devote to other parts of the business are affected." But he stressed that this is a backward looking, remedial piece and "shouldn't" affect current foreclosure cases.
So could a borrower get his or her home back? It's not out of the realm of possibility, although that is pretty unlikely given the home was probably already legally sold to someone else. Remediation would more likely involve fees that could be paid back or some other type of monetary compensation. No question it will be highly case-specific.
"The participating mortgage servicers remain committed to helping borrowers remain in their homes and have been working with federal banking regulators to resolve the issues raised in the consent orders," explained Paul Leonard of the Financial Services Roundtable in a release. The reviews, he adds, could take several months to complete.
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