â€œThey done me wrongâ€¦.â€ Not just lyrics from a blues song. It describes how some homeowners felt they were treated by their mortgage companies after struggling to make mortgage payments. Now itâ€™s some of the mortgage companies who could be singing the blues.
Several federal agencies caught 14 mortgage loan servicers engaged in unfair foreclosure practices. As part of a consent order, an Independent Foreclosure Review (IFR) process was set up to determine if homeowners were financially harmed by these practices. If harm was done, individual homeowners could receive compensation that could range from $500 to $125,000 per homeowner for wrongful foreclosures, rejections of loan modifications, lost paperwork, unjustified delays, and other errors. Borrowers could also be eligible for loan modifications, corrections to credit reports, and more.
There is no cost to consumers to request an IFR, and it does not affect any other foreclosure related actions borrowers might choose to take.
The consent decree also required the 14 servicers to mail out notices to homeowners who could possibly have been harmed by these practices. In spite of a mass mailing sent to eligible homeowners between Nov. 2011 and Feb. 2012, there have been few homeowners applying for the independent reviews. Some experts think the low response rate may be explained by the many housing-related scams that scare homeowners away from legitimate assistance. Affected homeowners who received these letters from their servicers either never opened them, or assumed it was just another scam. As a result, U.S. Department of Housing and Urban Development (HUD)-approved housing counseling agencies, like CCOA, have been asked to help get the word out about this program â€“ and to reassure effected homeowners that the program is real.
To qualify for the independent foreclosure review, a homeowner has to meet three conditions. Their mortgage must have been serviced by one of the companies named in the decree (the full listing is available at the IFR website below). The home must be the ownerâ€™s principle residence (not a rental property or second home). Finally, the loan must have been in some stage of foreclosure in 2009 or 2010. That simply means that the homeowner received an â€œintent to forecloseâ€ letter from their servicer. It is not necessary for the entire foreclosure process to have run its course. We urge homeowners who could have been affected to call the IFR toll-free number (877.339.6322) to see if they are eligible for a review, and if so, to request an IFR application. The deadline to apply has been extended to Dec. 31, 2012. The compensationÂ framework has been announced, and can be found at: www.independentforeclosurereview.com.
Mark Foster is Director of Education with Credit Counseling of Arkansas (CCOA). CCOA is a member of the National Foundation for Credit Counseling. Visit CCOA online at www.CCOAcares.com.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.