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Servicers Must Review, Compensate Improper Foreclosure Claims

by devteam November 2nd, 2011 | Share

Homeowners who believe they werernfinancially harmed by improper foreclosure procedures now have a new avenue forrnrelief.  Three major federal regulators, ThernFederal Reserve Board and the Offices of Thrift Supervision and Comptroller ofrnthe Currency announced this morning that servicers under their supervision willrnbe required to provide compensation to borrowers if their foreclosure processesrncaused financial injury.  </p

As part of their compliance withrnenforcement actions issued by the three regulators April, a total of fourteenrnlarge servicers have been required tornretain independent consultants approved by the regulators to conduct reviewsrnwhen requested by eligible borrowers who were in foreclosure during 2009 orrn2010, whether or not the foreclosure was completed.  The consultants are charged with evaluatingrnwhether borrowers suffered financial injury through errors, misrepresentations,rnor other deficiencies in foreclosure practices and determining appropriate financialrnremediation for those customers. </p

The fourteen servicers (and their affiliates), all of whom havernbegun mailing letters to eligible borrowers that explain how to request a casernreview, are:</p<ul type="disc"

  • America’s Servicing Co. </li
  • Aurora Loan Services </li
  • Bank of America </li
  • Beneficial </li
  • Chase </li
  • Citibank</li
  • CitiFinancial</li
  • CitiMortgage </li
  • Countrywide </li
  • EMC </li
  • EverBank/EverHome Mortgage Company</li
  • GMAC Mortgage</li
  • HFC </li
  • HSBC </li
  • IndyMac Mortgage Services</li
  • MetLife Bank</li
  • National City Mortgage</li
  • PNC Mortgage </li
  • Sovereign Bank</li
  • SunTrust Mortgage</li
  • U.S. Bank</li
  • Wachovia Mortgage</li
  • Washington Mutual (WaMu)</li
  • Wells Fargo Bank, N.A. </li</ul

    Requests for review must be received by April 30, 2012. rnRegulators are encouraging borrowers to carefully consider the informationrnabout the review program to determine if they should participate. There are norncosts associated with being included in the review nor do borrowers need anrnattorney. </p

    In addition to this outreach and claims program, the independent consultantsrnwill also review a variety of sample cases from each servicer.  Where theyrnidentify issues, they will conduct additional secondary reviews to identify asrnmany affected borrowers as possible.  ThernFederal Reserve announcement said that certain categories of foreclosurernactions would receive special attention including members of the military whornwere covered by the Servicemembers Civil Relief Act and borrowers who hadrnpreviously filed complaints with the services for foreclosure actions pendingrnduring the 2009-10 period.  </p

    The Federal Reserve said further than it believes monetary sanctions againstrnservicers are appropriate and plans to announce penalties in addition to anyrncompensation provided to borrowers following the reviews. </p

    Some examples of situations that mightrnprompt a request for review were provided in the materials released to thernpress and public.  </p<ul class="unIndentedList"<liThe mortgage balance amount at therntime of the foreclosure action was more than the borrower actually owed.</li<liThe borrower was doing everythingrnthe modification agreement required or was properly pursuing a modification butrnthe foreclosure sale still happened.</li</ul<ul type="disc"

  • The foreclosure action occurred while the borrower wasrn protected by bankruptcy.</li
  • Fees charged or mortgage payments were inaccuratelyrn calculated, processed, or applied.</li
  • The foreclosure action occurred on a mortgage that wasrn obtained before active duty military service began and while on activern duty, or within 9 months after the active duty ended. </li</ul

    “Thernindependent foreclosure review is a significant component of the mortgagernservicers’ compliance with our enforcement actions,” said actingrnComptroller of the Currency John Walsh.  “These requirements helprnensure that the servicers provide appropriate compensation to borrowers whornsuffered financial harm as a result of improper practices identified in ourrnenforcement actions.”</p

    Walsh said the reviews will take several months to complete, considering thernlarge pool of borrowers that could be part of the review.</p

    The enforcement actions issued by the regulators in April also require thernservicers to correct other deficiencies in residential mortgage loan servicingrnand foreclosure practices going forward, including specifying a single point ofrncontact for certain borrowers who are having difficulty paying their mortgages,rnensuring that foreclosures are not pursued when a borrower is performing on arnloan modification, and establishing robust controls and oversight over theirrnthird-party vendors. </p

    Information on filing a review request is available at www.IndependentForeclosureReview.com.rn 

    All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

    • About the Author

    devteam

    Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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