Restitution for victims of improper foreclosure practices

Dennis Norman, St Louis REALTORRobo-signing is one of those terms I never heard until the news of improper foreclosure practices by some of the nation’s largest lenders started hitting the news in the past year and now the word has become synonymous with bad foreclosure practices. As a result, in April of this year the Office of the Comptroller of Currency (OCC), along with other federal agencies, took action against 14 major banks to stop the improper practices.

Some have argued that the actions taken by the Fed’s amounted to nothing more than a slap on the wrist to the banks involved, but the focus of this article is not so much on that, but more on what is being done to properly compensate people that were victim’s of improper foreclosure practices. Having said that, if you do want a more in depth look at what has been alleged was done by the banks, the 60 minutes video below, which aired in April, is worth watching. Additionally, if you really want the “inside scoop” you can read the “Interagency Review of Foreclosure Policies and Practices” that was published by the Fed in April by clicking here.

Restitution for victims:

As far as what the plan is to compensate victim’s of robo-signing and other improper foreclosure procedures, acting Comptroller of the Currency, John Walsh, laid out the plan earlier this week when he addressed The American Banker Regulatory Symposium in Washington D.C. Below is a recap of some of the highlights of what he had to say as well as the process victims need to follow to apply for compensation:

  • Who is eligible – Any borrower whose primary residence was serviced by the companies included in the action and whose loan was in any stage of foreclosure between January 1, 2009 and December 31, 2010. According to Walsh, there are about 4.5 million mortgages in the U.S. that fall into this category.
  • Which banks/servicers are involved? – The 14 mortgage service companies that entered into the agreement were: Ally Bank/GMAC, Bank of America, Citibank, Everbank, HSBC, JPMorgan Chase, MetLife, OneWest, PNC, SunTrust, U.S. Bank, and Wells Fargo.
  • Who will get restitution? –There will be an independent review of each claim for compensation by borrowers and it will be determined if they were financially harmed due to “servicer deficiencies, errors or misrepresentation” and, if they were, what kind of restitution should be provided. If you meet the requirements above, and feel you have suffered financial injury as a result of errors, misrepresentations, or other deficiencies in the foreclosure process you will be able to request a review to be considered for compensation.
  • How will you find out? – Affected borrowers in this timeframe will be contacted through direct mailings and other tracing techniques. The independent consultants will also launch a coordinated advertising campaign to help contact borrowers who cannot be reached through direct mailings or other means.
  • Same source for all lenders – In order to keep the process simpler for borrowers, the Fed’s have required that all of the independent consultants, for all of the lenders, use a single claims processing vendor that will have common forms, a single website and a single phone number for eligible borrowers, regardless of which lender you used. If you are eligible to request a review, you will be able to request this by filing a claim on the website, by completing a form and mailing it, or by calling a toll-free phone number.
  • How long will it take? – Not surprisingly, due to the number of loans involved, Walsh said the review will take several months at the end of which you will receive a letter explaining the outcome as well as information about restitution where appropriate.

I’m sure there will be more questions, such as the website address the phone number, etc, none of which is available at this time as far as I know however, as I obtain additional information I will update this post so sign up for the RSS feed or email updates to stay up to date.

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