In response to the current foreclosure crisis in the U.S., in 2011 the Federal Reserve Board and the Office of the Comptroller of the Currency required certain mortgage servicers to hire impartial consultants to review foreclosures that were initiated, pending, or completed during 2009 or 2010. The independent consultants are charged with identifying borrowers they believe may have incurred financial harm as a result of improper loan servicing, and borrowers themselves may request a review if they believe they suffered financial injury as a result of the foreclosure process. The consultants must then determine whether or not the identified borrowers suffered harm due to the servicer’s “errors, misrepresentations, or other deficiencies” in the foreclosure process and, if such harm is found, the servicer is required to compensate borrowers or otherwise remedy any mistakes.
Who is Eligible for an Independent Foreclosure Review?
In order to be eligible for a foreclosure review, a borrower must meet the following criteria:
- The loan was secured by the borrower’s primary residence
- The foreclosure was initiated, pending, or completed in 2009 or 2010; and
- The mortgage was serviced by one of the following mortgage servicers:
- America's Servicing Company
- Aurora Loan Services
- BAC Home Loans Servicing
- Bank of America
- EMC Mortgage Corporation
- EverBank/EverHome Mortgage Company
- Financial Freedom
- GMAC Mortgage
- IndyMac Mortgage Services
- MetLife Bank
- National City Mortgage
- PNC Mortgage
- Sovereign Bank
- SunTrust Mortgage
- U.S. Bank
- Wachovia Mortgage
- Washington Mutual
- Wells Fargo Bank
- Wilshire Credit Corporation
- The mortgage balance (the amount of the unpaid principal balance, fees, and costs) that the servicer stated was due at the time of the foreclosure was more than was actually owed and/or non-allowable fees or costs were charged to the account. For example, the attorneys’ fees may have exceeded the amount allowed by state law or non-recoverable amounts (such as assignment recording charges, title claim charges, excessive property inspections, or unwarranted late fees) may have been charged to the account.
- The mortgage payments were inaccurately calculated, processed, or misapplied to the account. For example, the borrower sent in payments but the lender never credited them for the amount.
- The borrower complied with the terms of a loan modification, but the foreclosure sale was completed nonetheless. Another example would be if a borrower was granted a loan modification, but the foreclosure sale occurred before it was implemented.
- The foreclosure happened even though the borrower was under bankruptcy protection.
- The borrower was on active military duty at the time of the foreclosure, and the foreclosure proceedings violated the protections afforded to military servicemembers by the Servicemembers Civil Relief Act.
The independent foreclosure review has not received a great deal of publicity, and only a small percentage of the borrowers who are eligible have submitted requests for review. Even if a borrower previously fought their foreclosure action in court or otherwise filed a complaint (for example, with the Better Business Bureau or with their mortgage servicer directly), that borrower is still entitled to partake in the independent review process and may elect to have his or her foreclosure reviewed. Also, the foreclosure does not need to have been completed for a borrower to be eligible for the review. If the loan was reinstated, paid off, or the borrower received a loan modification, a review is still available so long as the criteria mentioned earlier in this section is met.
Potential Harms in the Foreclosure Process
Some examples of mortgage servicer errors, misrepresentations, or other deficiencies in the foreclosure process that may have caused borrower harm are:
These are common examples, but it is not an exhaustive list. If wrongdoing is found as a result of the independent foreclosure review, the mortgage servicer must provide remediation. Remedies could include, for example, reimbursement for inappropriate charges or the unwinding of the foreclosure.
How to Request a Review
To request the review, you must submit a Request for Review form to the independent review administrator. The form must be received by December 31, 2012. The review could take as long as several months to complete so the sooner the form is returned, the sooner you will receive the results. There is no charge to partake in the review process.
Forms were mailed to potentially eligible borrowers in November and December 2011, but many mailings were undeliverable and the intended recipients could not be found (which make sense since many borrowers were forced to move following a foreclosure). If you did not receive a Request for Review form or have since discarded it, the form is available online at: https://independentforeclosurereview.com/. At this website, you can check your eligibility for review, complete the Request for Review form, and submit the form online. You can also get some help in figuring out who serviced your mortgage loan.
When completing the Request for Review form, be as detailed as possible regarding your complaint, including dates and providing documentation if available. To get the most out of the review, focus on problems with the foreclosure process rather than raising issues that are outside of the scope of the review. For example, it would be worthwhile to mention if you believe notice of the foreclosure was not appropriately provided or unacceptable fees were charged, but noting that you did not realize there was lead paint on the walls or that you didn’t understand the loan documents will likely be unhelpful. The review is specific to problems with the foreclosure.
For more information go to: www.federalreserve.gov/consumerinfo/independent-foreclosure-review.htm or call 888-952-9105, Monday through Friday from 8:00 a.m. to 10:00 p.m. (ET), and Saturday from 8:00 a.m. to 5:00 p.m. (ET).