Finding help for wronged borrowers in foreclosure process

Posted: July 11, 2012

If you were targeted for foreclosure during 2009 or 2010 and suspect something went wrong, time is running out on an independent review ordered last year by federal banking regulators that could bring you up to $125,000, or even more, in compensation. But free help is available if you're baffled by the process.

The reviews — ordered by the Office of the Comptroller of the Currency and the Federal Reserve — have sparked some confusion, partly because they are separate from the widely publicized multistate settlement with five large banks centering on their use of so-called robo-signed foreclosure documents.

Under that agreement with the federal government and 49 states' attorneys general, the nation's largest mortgage servicers — Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo — are expected to pay $25 billion to $32 billion, partly to the states and partly in direct compensation to wronged borrowers. If you qualify, in theory you'll eventually be contacted. For information, go to www.NationalMortgageSettlement.com.

The review process ordered by the Fed and the OCC is broader, focusing on mortgages serviced by 14 banks and 13 of their subsidiaries or affiliates. More than 4.3 million homeowners are eligible to request the independent reviews, based simply on the fact that they were targeted in some way during 2009 or 2010 — whether by a foreclosure initiated, pending or completed during those years.

The 14 banks are Ally, Aurora Bank, Bank of America, Citi, EverBank, HSBC, JPMorgan Chase, MetLife Bank, OneWest, PNC, Sovereign, SunTrust, US Bank and Wells Fargo. You can find the whole list, additional information, and an online application at IndependentForeclosureReview.com.

If you're confused by the process but would like your dealings with your servicer reviewed — even if a foreclosure was never completed — you can get outside help for free. In the Philadelphia area, the Urban League is offering aid, thanks to a $250,000 grant from Bank of America to its national parent organization. Call 215-985-3220, Ext. 201, for information or to request an appointment.

The deadline for applying has been extended to Sept. 30. By the end of May, fewer than 200,000 borrowers had requested reviews. Regulators have also directed the servicers to review 145,000 borrowers' files based on particular issues, such as whether a borrower was involved in a bankruptcy or is covered by the Service Members Civil Relief Act, which protects members of the armed forces.

Who can expect compensation, and how much? That depends on what the reviewer finds, said Bryan Hubbard, a spokesman for the comptroller's office.

Hubbard said that it was unclear how many of the 4.3 million borrowers might qualify, but that compensation could range from $500 "for improper fees or errors that do not result directly in foreclosure" to $125,000 plus lost equity for the most egregious mistakes or improprieties.

He said relief could also include suspension of a pending foreclosure, reversal of a completed foreclosure, and the correction of blots on credit reports.

A key consumer protection in the process is that lenders who pay compensation can't require a borrower to sign a waiver barring them from other relief, if they eventually win a lawsuit, for instance, or are awarded funds from the multistate settlement.

"Borrowers give up nothing by requesting a review," Hubbard said.

Contact Jeff Gelles at 215-854-2776 or jgelles@phillynews.com.

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