Poor Response Spurs Deadline Extension for 'Independent Foreclosure Review'

Borrowers seeking a review of foreclosure actions from 2009 and 2010 under the banking regulators’ so-called Independent Foreclosure Review now have until Dec. 31, 2012 to submit their requests.
The new deadline “provides additional time for borrowers to request a review if they believe they suffered financial injury as a result of errors,” according to a combined statement from the Office of the Comptroller of the Currency (OCC) and the Federal Reserve. The previous deadline was July 31.
If the review finds homeowners were victims of errors, the borrower could receive lump-sum payments, suspension or rescission of a foreclosure, a loan modification or other loss mitigation assistance, correction of credit reports, or correction of deficiency amounts and records.
Lump-sum payments can range from $500 to $125,000 and equity restoration in the most serious cases, the agencies said.
The drawn-out process has garnered a poor response from eligible borrowers, less than 10 percent of the 4.4 million homeowners targeted have returned mailed paperwork to request a review.
A lack of effective communication with borrowers and insufficient feedback from consumer groups has led to a denial of a “fair opportunity” for foreclosure victims to request an independent review, according to the General Accountability Office, the nonpartisan Congressional watchdog.
The GAO reported last month that the poor response among borrowers is a result of weak preparation by mortgage services and regulators.
“Neither the servicers nor the regulators conducted readability testing or focus groups with the target audience of eligible borrowers, and regulators initially did not solicit input from consumer or community groups familiar with these borrowers,” the GAO said in its report on the Independent Foreclosure Review.
As part of enforcement actions issued in April 2011, the OCC and the Fed have required 14 large mortgage servicers to retain independent consultants for reviews of foreclosure activity in 2009 and 2010. Supervised by regulators, the consultants are to identify borrowers who may have been “financially injured due to errors, misrepresentations, or other deficiencies.”
There are no costs associated with being included in the review.  More information, including how to apply online, is available at www.independentforeclosurereview.com.

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