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Foreclosure Review Deadline Looms: Opt In By Monday, Or Risk Losing Cash

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If you were in foreclosure in 2009 or 2010, you’ve got until Monday, Dec. 31 to request of independent review of your case. You’ve got nothing to lose except a chance at free money.

Pursuant to a settlement between federal bank regulators and 14 mortgage servicers, homeowners in foreclosure in 2009 or 2010 have until Monday to sign up to have their cases reviewed and these reviews can lead to some form of compensation for homeowners. The servicers have allocated money for principal reduction and loan modifications, as well as direct payments to people who lost their homes to foreclosure under flawed and even illegal circumstances. In some cases the compensation is no biggie – a few hundred dollars. However, in other more egregious cases, the payout could be as much as $125,000, plus interest.

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Sadly, while as many as 4.3 million homeowners are eligible for review, just 369,000 have requested the review as of earlier this month. That may be a good batting average in baseball, but it’s a pathetic one here.  Even worse, the deadline for requesting a foreclosure review has been extended three times.

Eligible homeowners must submit their review requests online at the website independentforeclosurereview.com or send a letter that must be postmarked no later than Dec. 31. Those looking for FAQs can find them on that website or they can call 888-952-9105. Here’s a link to instructions for completing the request for review. (How ironic that Monday is also the day this nation could be toppling over the fiscal cliff.)

Some have maintained that many borrowers may have ignored the notices either because they were drafted in the financial industry’s traditional 27th-grade English, causing readers to glaze over and experience mind lock, or they resemble junk mail. This is from an SFGate.com story earlier this year.

Others say foreclosure errors were rampant but the review offer was poorly publicized, hard to understand and indistinguishable from the flood of junk mail people in foreclosure get from outfits – sometimes posing as government agencies – offering mortgage assistance for a fee.

“The letter came to me, but I was so overwhelmed with all these groups trying to sell you services, I may have destroyed it,” says Clarindo Gomes, who was denied a modification in 2009 and was proceeding with a short sale when his house was sold in foreclosure on March 7.

Homeowners like Mr. Gomes weren’t the only ones to voice their concerns; a Government Accountability Office report issued in June seemed not to quibble with these assertions.
Free Credit Check ToolThe settlement that granted these free reviews for homeowners followed a federal investigation that determined there were significant flaws in many foreclosures, in particular questionable documentation issues.

The reviews were supposed to examine a host of foreclosure errors like excessive fees, payments that were improperly applied, inappropriate foreclosures and wrongfully denied loan modifications. According to the OCC, the amount of restitution is not uniform due to the unique facts in each case and the level of individual financial hardship.

This settlement is separate from the $25 billion National Mortgage Foreclosure Settlement that focused on the robo-signing epidemic.

[Related Article: Propublica’s FAQ on the New Foreclosure Review Process]

Here is a list of the mortgage servicers (and their affiliates) participating in the free independent foreclosure reviews for those whose primary residences were subject to foreclosure activity in 2009 and 2010, according to a recent Marketwatch article:

  • America’s Servicing Co.
  • Aurora Loan Services
  • BAC Home Loans Servicing
  • Bank of America
  • Beneficial
  • Chase
  • Citibank
  • CitiFinancial
  • CitiMortgage
  • Countrywide
  • EMC
  • EverBank/EverHome Mortgage Company
  • Financial Freedom
  • GMAC Mortgage
  • HFC
  • HSBC
  • IndyMac Mortgage Services
  • MetLife Bank
  • National City Mortgage
  • PNC Mortgage
  • Sovereign Bank
  • SunTrust Mortgage
  • U.S. Bank
  • Wachovia
  • Washington Mutual
  • Wells Fargo
  • Wilshire Credit Corp.

Image: Jeffery Turner, via Flickr

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