Approximately 4,000,000 foreclosure cases completed in 2009-2010 are under review. And, the injured borrowers are getting an opportunity to have their foreclosure cases reviewed for reimbursement payments. Unfortunately, whether a borrower will get a reimbursement is up to the same lender accused of moving too quickly to seize their home. Starting November 1st, mortgage lenders and servicers are sending notifications to potentially eligible borrowers; asking if they want their case reviewed. Lenders will have to compensate homeowners when a borrower suffered a financial injury. And, when there is no minimum or maximum dollar amount identified. This sounds like a serious case of the "fox guarding the henhouse."
The nation's 14 largest mortgage servicers -- including Citibank, Bank of America, JPMorgan Chase, and Wells Fargo -- were ordered to offer to review cases. This is after the government found that some rushed the foreclosure process without carefully reviewing documents.
Homeowners may seek review; if they believe they were improperly foreclosed on, were not credited for mortgage payments, if they were assessed improper fees, or were otherwise wronged as a result of the foreclosure process. Furthermore, homeowners facing imminent foreclosure will receive the highest priority for review. Homeowners may be eligible for a review. This is as long as they were subject to any foreclosure action during 2009 or 2010.
However, critics say the orders were too lenient on the banks. And, that it was inappropriate for the lenders to review their own potential mistakes. There is a natural disincentive for lenders to reach the households their practices have harmed. However, independent consultants will also review cases to see if the lender is trying to dodge blame.
Examples of situations where a borrower might be able to obtain relief include:
1. The borrower was in the process of obtaining a loan modification when the foreclosure action occurred.
2. The mortgage balance claimed by the lender; or servicer at the time of the foreclosure action was more than the borrower actually owed.
3. The borrower was not given proper credit for mortgage payments, or improper calculation or application of fees occurred.
4. The borrower was under bankruptcy protection when the foreclosure action occurred.
5. The borrower was on active military service; or has exited active service less than 9 months earlier when the foreclosure action occurred.
6. Other situations may qualify as well.