Most of them amount to $300 or a little more, those foreclosure-relief checks going out to millions of Americans who were caught up in mortgage-related abuses or wrongdoing by the biggest banks, a saga that is starting to get national television attention.
MSNBC’s “Morning Joe” program today put a spotlight on the victims who become “eligible borrowers” under the Independent Foreclosure Review, a failed process to uncover specific wrongdoing.
It become so costly and out-of-control that regulators opted for a $3.6 billion payout system in January, categorizing borrowers according to the degree of financial harm. The payouts started April 12.
But how banks and regulators arrived at these categories is mostly a mystery.
“For families who endured years of anguish or lost their homes, critics say these payments are cold comfort,” reads the introduction to the segment by NBC’s senior investigative correspondent Lisa Myers. “The banks don’t have to admit wrongdoing and even if there’s evidence of illegal conduct, the government so far isn’t providing that information to homeowners.”
(See MSNBC segment below)
But even homeowners who never defaulted on their loans and were wrongly foreclosed upon are getting a few hundred dollars, even though such harm should qualify for the highest compensation of $125,000, according to borrowers, lawmakers and consumer advocates.
“Timothy, a trucker, says he’s been fighting to save his home since his servicer made a mistake declaring his family behind on the mortgage when they were not,” Myers said on the MSNBC segment. “He received a postcard saying he’ll get a check. He too expects $300.”
“It’s kind of like a slap in the face,” Timothy said. “We have been trying to work through this for three years now and we have lost lots.”
Rep. Elijah E. Cummings, D-Maryland, ranking member of the House Committee on Oversight and Government Reform, was interviewed by Myers.
Cummings and Sen. Elizabeth Warren, D-Massachusetts, have taken the lead in trying to get to the bottom of the failed foreclosure reviews and how regulators arrived at the various payouts, ranging from $300 to $125,000.
Cummings and other representatives are sponsoring a bill to create an “independent monitor” over the banks and the regulators.
“It makes me feel very emotional because I run into people like that every day, where they are getting a $300 check and losses amount to $250,000,” Cummings said. “The banks are in control of this process.”
Cummings and Warren have sent a letter to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry, challenging the decision by their staff not to provide any documents from the scuttled reviews.
Staff from the regulatory agencies claimed these documents are the “trade secrets” of mortgage servicing companies and should be withheld even from members of Congress.
“The banks already admitted to wrongdoing and illegal activity,” Cummings said. (We asked the regulators): Can you tell us exactly which bank did what and how it was done? They said no. Because these are trade secrets… We cannot even get that information.”
Cummings said he hopes an independent monitor can make better progress.
“We’ve got a monitoring bill where we go back and we’ll look at this settlement, and actually bring some transparency to figure out exactly what went wrong. And try to hopefully bring some correction to these people who have been damaged.”
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- Foreclosure-Review Borrowers Grappling with Credit Reports
- Mystery Deepens Over ‘Error Rates’ of Foreclosure Reviews
- Borrowers Mull ‘Class Action’ as Foreclosure Review Checks Arrive