Reviews to Address Foreclosure Errors

Tuesday, Nov 1, 2011

Homeowners who think they have been wronged through foreclosure proceedings will soon be able to request a third-party review of their case and possibly obtain compensation.

Starting today, mortgage lenders and servicers are sending notifications to potentially eligible borrowers who were subjected to foreclosure actions in 2009-10, informing them of their right to seek a review and how to proceed if they wish to do so.
 
The mailings were ordered as part of an enforcement action against 16 mortgage lenders and servicers taken jointly by the Federal Reserve, Office of the Comptroller of Currency (OCC) and the Office of Thrift Supervision (OTS).
 

Assistance for homeowners harmed by foreclosure errors

 
Homeowners may seek a review if they believe they were improperly foreclosed on, were not credited for mortgage payments, were assessed improper fees or were otherwise wronged as a result of the foreclosure process. Borrowers facing imminent foreclosure will receive highest priority for review and scheduled foreclosure sales will be suspended pending the outcome of the review.
 
The reviews are not intended to prevent legitimate foreclosures, according to the OCC, but to enable homeowners who may have been hurt by wrongful foreclosure practices to obtain remedies and possible compensation.
 

Who can get help?

 
Examples of situations where a borrower might be able to obtain relief include:
 
            • The borrower was in the process of obtaining a loan modification when the foreclosure action occurred
            • The mortgage Balance claimed by the lender or servicer at the time of the foreclosure action was more than the borrower actually owed
            • The borrower was not given proper credit for mortgage payments, or fees were inappropriately calculated or applied
            • The borrower was under bankruptcy protection when the foreclosure action occurred
            • The borrower was on active military service or has exited active service less than 9 months earlier when the foreclosure action was taken
 
Other situations may qualify as well. Foreclosure actions include notices of default, notice of a scheduled foreclosure sale and the actual sale itself.
 

Covers any foreclosure actions in 2009-10

 
Homeowners may be eligible for a review as long as they were subject to any foreclosure action during 2009 or 2010, even if the actual foreclosure process on their home began or ended outside those years.
 
The reviews arise from an enforcement action the three agencies ordered against the targeted lenders and servicers for improper practices related to mortgage servicing and foreclosing. The lenders in question were required to make arrangements for third-party reviewers and to contact borrowers advising them of their potential eligibility.
 
The action covers all of the nation’s largest mortgage servicers, including Bank of America, Citibank, JP Morgan Chase and Wells Fargo, along with a variety of smaller lenders and third-party vendors.

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