Report: Independent Foreclosure Review to Become $10B Settlement with 14 Banks

Report: Independent Foreclosure Review to Become $10B Settlement with 14 BanksThe deadline for homeowners to seek an “independent foreclosure review” ended with the new year, but that may not matter because regulators are scrapping the program in favor of another multi-billion dollar settlement with lenders, according to a report by the New York Times.
That may be good news for wronged homeowners, who may be compensated by up to $125,000 in cash, plus equity, in the most egregious cases, according to information previously released by banking regulators.
The deadline was Monday, Dec. 31, to request a free and impartial review of foreclosures processed between Jan. 1, 2009 and Dec, 31, 2010. The reviews sought to identify borrowers who may have been financially injured “due to errors, misrepresentations, or other deficiencies in the foreclosure process.”
But banking regulators are close to a $10 billion settlement with 14 banks that would end this latest effort to right the wrongs of shoddy paperwork, excessive fees and evictions that were not warranted, the Times reports, citing people with knowledge of the discussions.  Banking regulator, The Office of the Comptroller of the Currency, announced the start of the independent foreclosure review as part of its enforcement action taken in April 2011.
The Times reports that “pressure to reach a settlement with the banks has been building, particularly within the Office of the Comptroller of the Currency, amid widespread frustration that the banks’ mandatory review of loan files was arduous and expensive, and would not yield promised relief to homeowners, according to five former and current banking regulators.”
The Independent Foreclosure Review is separate from the much more publicized $25 billion National Mortgage Settlement with the top lenders. The review’s official website today makes no mention of a settlement.  It only mentions that the “submission window is closed” for seeking foreclosure reviews.
The Times reports that the pending settlement would provide $3.75 billion for  borrowers who have improperly lost their homes in the 2009-2010 time-frame, making this deal potentially more generous to former homeowners than the broader pact reached in February between state attorneys general and five large banks. Although it was billed as a $25 billion settlement, that deal set aside $1.5 billion in cash relief for Americans.
Most of the relief in both agreements seeks to help those who are struggling to stay in their homes, requiring the banks to reduce the borrowers’ payments or lower the amount of principal they owe.

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