Get Screwed During Foreclosure? Time is Running Out to Get Even

by Odysseas Papadimitriou on May 30, 2012

independent foreclosure review programIf your home was foreclosed upon during the Great Recession, not only do you have company – there were 6.6 million foreclosures in 2009 and 2010 alone, according to RealtyTrac – but you may also be entitled to compensation under a government program that will run through July 31 (that’s only two months away, so get a move on!).

The Federal Reserve and the Office of the Comptroller of the Currency are requiring that 27 major lenders let independent consultants review foreclosures that were initiated, pending, or completed between January 1, 2009 and December 31, 2010 because (surprise, surprise) these lenders didn’t always do things by the book.

You see, it came to light following the collapse of the housing market that many mortgage servicing companies had been engaging in various improprieties, such as robo-signing (falsifying documents or approving foreclosure proceedings without reading the respective home loan files). While these tactics weren’t limited to the mortgage market – Chase recently came under fire for improper credit card debt collection – the effects were obviously the most harmful when it came to people’s homes.

According to IndependentForeclosureReview.com, the website for the government-mandated oversight program, some primary examples of mortgage company missteps that could have resulted in consumer financial injury are:

  • Your mortgage balance was overstated at the time of foreclosure.
  • Foreclosure proceedings began despite the fact that you were: A) in bankruptcy; B) waiting to hear about a request for mortgage assistance or modification; or C) abiding by terms of mortgage modification.
  • The foreclosure proceedings coincided with active military service.

At this point, you’re probably licking your lips at the prospect of getting back at your mortgage provider and wondering just how much you could expect to receive if the independent reviewer sides in your favor. Well, the exact financial terms of the Independent Foreclosure Review program are yet undisclosed, but government officials have said publicly that wronged consumers can expect to be compensated up to the equity in a lost home.

That won’t necessarily bring back a home that was undoubtedly full of irreplaceable memories, but given that it could mitigate the financial fallout of a foreclosure as well as make the purchase of a new home possible, it certainly does beg the question of how one qualifies for a mortgage foreclosure review.

In order to be eligible, your mortgage servicer must obviously be one of the 27 participating in the program, the foreclosed property must have been your primary residence, and, as mentioned previously, some aspect of the foreclosure proceedings must have taken place in 2009 or 2010. You must also postmark a Request for Review Form by July 31. Roughly 4.3 million people have already been mailed these forms in the past seven months, according to the Wall Street Journal, yet only about 3% of them have acted. That’s why the Fed recently released the following public service announcement.

Ultimately, it’s interesting that participation in this program has been so scarce. Perhaps it speaks to poor financial literacy or borrowers’ lack of trust for financial institutions, but the truth is that the program doesn’t cost you anything, so there’s no reason not to see what it could have in store for you. After all, the mortgage companies didn’t do you any favors when you were having tough times – in fact, they bent the rules unfavorably – so why let them slide now?

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For your information, the 27 lenders participating in this program are:

  • America’s Servicing Co.
  • Aurora Loan Services
  • BAC Home Loans Servicing
  • Bank of America
  • Beneficial
  • Chase
  • Citibank
  • CitiFinancial
  • CitiMortgage
  • Countrywide
  • EMC
  • EverBank/EverHome Mortgage Company
  • Financial Freedom
  • GMAC Mortgage
  • HFC
  • HSBC
  • 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, N.A.
  • Wilshire Credit Corporation

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