Lawmakers Seek Details on 'Independent Foreclosure Review' Deal with Banks

Lawmakers Seek Details on 'Independent Foreclosure Review' Deal with BanksA U.S. congressional oversight panel has asked bank regulators for details on the $8.5 billion foreclosure-wrongdoing settlement – stemming from the 20-months-old “Independent Foreclosure Review” with 14 mortgage servicers, according to a letter made public this weekend.
The request did not stop the regulators’ official announcement of the settlement on Monday.
The deal would potentially compensate borrowers who went through improperly processed foreclosures, and in some cases evictions, in 2009 and 2010. More than 4 million borrowers are estimated to be in the eligibility pool.
But the Independent Foreclosure Review, based on enforcement actions taken in April 2011, has been plagued by delays and was the target of a critical report by a nonpartisan Congressional watchdog last year. A lack of effective communication with borrowers led to a denial of a “fair opportunity” for foreclosure victims to request an independent review, the GAO concluded then.
In the letter to the banking agencies this weekend, the top Republican and Democratic lawmakers on the House of Representatives Oversight Committee asked regulators specifics about homeowner compensation and for a status update on the foreclosures awaiting review.
“We would like more information about how the potential settlement amount is to be determined in light of the potential wrongdoing identified to date, how much such aid is to be distributed and in what form, and what may happen to homeowner files that are still awaiting review,” said the Jan. 4 letter to Federal Reserve Chairman Ben Bernanke and the Comptroller of the Currency Thomas Curry.
The settlement’s payout sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments.
But it is unclear how that figure jibes with last year’s compensation guide released by the regulators.
In the most egregious cases against evicted homeowners, the guide from last year said that a  borrower is entitled to a $125,000 payment “plus equity, remedy deficiency, and correct credit reports” if the foreclosure was complete at the time of remediation, and a rescission of foreclosure is not possible.
The official Independent Foreclosure Review website makes no mention of a settlement. Homeowners who believed they were eligible to participate in the program were required to complete and submit a Request for Review Form no later than December 31, 2012.

3 thoughts on “Lawmakers Seek Details on 'Independent Foreclosure Review' Deal with Banks

  • January 7, 2013 at 7:44 am
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    They have been reviewing my file for a year now. No contact, No answer – NOTHING!!!! I call the tell me it taking longer than expect. That is it!!! Oh yeh!! They had more files than expected. Really a YEAR. That is crazy!!!! It gets tiring. The government gets these settlements, BUT nothing is done to help the consumer. The government looks good and the banks (BOA) still have control. I just received trial payments for my national settlement modification – yes, I am getting a principle small reduction, Interested was 7.25% they are lowering it to 6.63%. So my payments are still high. I might be able to refinance in three years – But since 2007, they have really destroyed my credit. Yes I have been fighting them since 2007 – I have received a payout from the FTC. I am still in my home!!!! Don’t really know how much longer. But I am here!!!

  • January 7, 2013 at 10:01 am
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    Its taking the banks forever because the process of auditing the foreclosures is not a simple, easy process. It takes months in some cases to receive documents from the courts. These borrowers really just need to STFU because they are the ones who signed the contract. Part of being able to afford a mortgage is more than just your income. If you live check to check, then maybe a $300K loan isn’t right for you. Until you pay off the note, its NOT your house. You are renting it from the bank.

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