The federal government has mailed nearly 4.4 million letters announcing a free foreclosure review program that could net foreclosed homeowners up to $125,000 or more, but only some 300,000 applications have been slated for review.
The small turnout has forced the government to extend the deadline for the second time for the “Independent Foreclosure Review,” a settlement designed to right foreclosure wrongs committed by mortgage servicers in recent years.
As part of ongoing enforcement actions issued last spring by the U.S. Treasury’s Office of the Comptroller of the Currency (OCC) and the Federal Reserve, awards to those eligible can vary from $500 to – in worst cases – as much as $125,000, plus lost equity.
Remediation can also include suspension or rescission of a foreclosure, a loan modification or other loss mitigation assistance, if the homeowner still faces foreclosure, as well as correction of credit reports, or correction of deficiency amounts and records.
No awards have yet been granted and not all reviews will result in awards.
According to statistics provided by the OCC, the government has mailed out nearly 4.4 million letters and forms announcing the program. However, only 338,447 foreclosure actions have been slated for review and the new deadline for filing is now September 30, 2012.
The original deadline was April 30, 2012. The government later extended the deadline to July 31, 2012.
Now, mortgage borrowers who faced a foreclosure action January 1, 2009 through December 31, 2010 have an extra two months to apply.
The program is open only to individuals who faced the foreclosure of a prime residence. It is not open to investors.
Also, borrowers can only obtain reviews if their servicer participates in the program. A list of participating servicers can be found at IndependentForeclosureReview.com.
There is no cost for a review.
Examples of financial injury that could result in compensation include, but are not limited to:
- Foreclosing on a borrower in violation of the Servicemembers Civil Relief Act.
- Foreclosing on a borrower who was not in default on the mortgage.
- Failing to convert a qualified borrower to a permanent modification after successful completion of a written modified payment plan that was supposed to lead to permanent modification.
- Foreclosing on a borrower prior to expiration of a written modified payment plan that leads to permanent modification, while borrower was performing all requirements of the written plan.
- Denying a borrower’s loan modification application that should have been approved.
- Failing to offer loan modification options as required by an applicable program.
- Giving a borrower a loan modification with a higher mortgage rate than should have been charged under the relevant loan modification program.
- Foreclosing on a borrower in violation of federal bankruptcy laws.
- Not providing a borrower with proper notification during the foreclosure process.
- Committing errors that did not result in foreclosure, but resulted in other financial injury.
The Independent Foreclosure Review is not to be confused with the National Mortgage Settlement, although both stem from the same kind of abusive foreclosure practices.
For more background information see: Independent Foreclosure Review on DeadlineNews.Com.