Federal regulators are planning a comprehensive review that may give millions of homeowners (both current and former) an opportunity to have their foreclosure cases examined. An examination may call for compensation to be made by banks for mistakes made in the process.
Borrower's are desperately seeking some form of financial relief and compensation for being victimized by lenders practicing robo-signing mortgage lending.
Borrowers that may be affected are those who were in some phase of the foreclosure process in ’09 or ’10. This means that several million borrowers could be eligible.
Any borrower determined to have sustained financial harm could be eligible for compensation which would be determined by a third-party firm with each case being reviewed individually. A review would have to be requested by a borrower before a specific date likely to be near the end of the first-quarter of 2012. As yet, no estimate has been offered as to how much money eligible borrowers might get. Still, it’s not expected that many borrowers will have their cases overturned, if any.
The review process is one of many efforts to address the robo-signing scandal wherein bank employees signed off on large numbers of foreclosures and claiming to personally have reviewed each case.
This is a separate effort than the attempt between federal agencies, banks, and state attorneys general to reach a multi-billion dollar settlement over foreclosure abuses. That effort ran into a hurdle as California’s state attorney general withdrew from negotiations.
This seriously hinders hopes of reaching a settlement as California has one of the nation’s largest volumes of foreclosures, and banks aren’t rushed to settle without California’s participation. Spokespersons for both sides say they’re still hopeful about reaching a deal despite the setback.
In the review process, financial injury can be defined as occurring in misrepresentation s or errors made by mortgage companies. So banks could be liable if they miscalculated mortgage payments or applied fees inappropriately. And banks may have to provide compensation if it’s found that it pushed a borrower to foreclosure while receiving partial payments as part of a loan modification.