Homeowners Who Faced Foreclosure May Be Entitled to More Than $125,000 for Lender Abuses
In April 2011, an enforcement action by federal authorities led a number of large mortgage servicers to agree to hire independent consultants to investigate whether foreclosure abuses led to homeowners suffering financial harm. If the independent consultants determine that financial injury occurred, homeowners will be compensated for their losses, plus may be entitled to additional compensation of up to $125,000 if a foreclosure sale improperly took place. This is an opportunity for homeowners to obtain an independent audit of how their foreclosure was handled, and is separate and distinct from the 2012 National Mortgage Settlement.
What are the qualification criteria to have my foreclosure reviewed?
- The foreclosure action took place between Jan. 1, 2009 and Dec. 31, 2010. The property did not have to go all the way through to foreclosure sale. Even if a foreclosure action was commenced improperly, but ultimately was not completed,the borrower may be entitled to compensation. This program is designed to compensate any qualifying borrower who suffered financial harm because of servicer errors in the foreclosure process.
- The property that was the subject of the foreclosure action was the borrower’s primary residence.
- The loan was serviced by one of the participating servicers in the program:
|Aurora Loan Services||EMC||PNC Mortgage|
|BAC Home Loans Servicing||EverBank/EverHome Mortgage Company||Sovereign Bank|
|Bank of America||Financial Freedom||SunTrust Mortgage|
|Beneficial||GMAC Mortgage||U.S. Bank|
|Citibank||HSBC||Washington Mutual (WaMu)|
|CitiFinancial||IndyMac Mortgage Services||Wells Fargo Bank, N.A.|
|CitiMortgage||MetLife Bank||Wilshire Credit Corporation|
|Countrywide||National City Mortgage|
What types of errors will lead to compensation? How much can I receive?
The following are the types of errors that will result in compensation under the Review:
- Violations of the Servicemembers Civil Relief Act. Military personnel who lost their home to foreclosure while on active duty are entitled to $125,000, plus any equity in the property lost as a result of the foreclosure. However, if the foreclosure can be reversed to put the borrower back into their home, the homeowner will be entitled to $15,000 in compensation.
- Borrowers who were not in default on their loan when the foreclosure took place.If a foreclosure was commenced due to a loan servicer error, borrowers will be entitled to $15,000 in compensation if the foreclosure can be rescinded. If the sale cannot be reversed, the borrowers are entitled to $125,000, plus any lost equity in the property.
- Borrowers who went to foreclosure due to errors in loan modification processing.If a lender foreclosed on a borrower who was current on a loan modification trial program or who successfully completed a trial program and was waiting for a permanent modification, the homeowner will be entitled to $125,000, plus any lost equity in the property. However, if the foreclosure sale can be undone, the borrower will be entitled to $15,000. If a foreclosure was improperly started — even if it was stopped before going to sale — the borrower is entitled to either $5,000 plus a permanent loan modification, or $35,000 if a permanent modification cannot be extended.
- Errors in loan modification application processing.If servicers improperly handled loan modification requests, borrowers may be entitled to compensation ranging from excess interest paid as a result of processing errors, up to $15,000, plus lost equity in the home. The types of qualifying processing errors include: erroneous denial of a modification request, failure to make a decision on a completed application, failure to make a timely decision on a completed application, failure to follow up with borrowers to complete HAMP modification applications, failure to solicit borrowers for HAMP modifications, and offering improper interest rates on HAMP modifications.
- Other servicing errors. Other errors will be reviewed and compensated on a case-by-case basis. These include improper foreclosures while borrowers were under bankruptcy protection,lack of standing by servicers, and lack of proper notice. Additionally, borrowers may be entitled to compensation for other servicer errors that occurred which did not result in foreclosure, but which caused financial injury to the borrower.
How will I be notified that I qualify for a foreclosure review?
The participating servicers sent out over four million notifications to borrowers who they believed may be eligible to file a claim. However, with the abundance of foreclosure-related relief promised through mailings, homeowners can be forgiven for thinking this was simply another piece of junk mail.
If borrowers believe they meet the criteria listed above, they can obtain a Request for Review form through the Independent Foreclosure Review website. Requests can be submitted by mail or on-line.
When is the deadline to request a review?
The original deadline for review applications to be submitted was April 2012. However, responses have been limited (90,000 requests by Feb. 2012 and 340,000 by May 31, 2012), so the Office of the Comptroller of the Currency and Federal Reserve have extended the deadline twice. The current submission deadline is September 30, 2012.
When should I expect a determination on my review request?
Responses will depend on the number of requests received through the program. After the eligibility window closes on September 30, 2012, borrowers will be able to call the program’s toll-free number (1.888.952.9105) to receive an estimate of when a response should be expected.
A considerable number of homeowners lost their homes to foreclosure or suffered other financial damage due to servicing errors by their lender. If you believe you were harmed in any of the ways outlined above, you may be entitled to financial compensation. Requests for review of your servicer’s actions and/or foreclosure circumstances can be submitted through the Independent Foreclosure Review website and must be made by September 30, 2012. Borrowers may also be entitled to additional compensation under the National Mortgage Settlement, which I have also written about recently. Our office is available for assistance in seeking the compensation to which you may be entitled. Contact me for further details.