On Tuesday, servicers began mailing letters to the estimated 4 million borrowers whose loans were in the process of foreclosure between Jan. 1, 2009, and Dec. 31, 2010, detailing how to request a review of an individual case.
Officials at the Office of the Comptroller of the Currency, which crafted the April servicer agreement along with the Federal Reserve, said the mailings would continue through the end of the year and be accompanied by a large-scale marketing campaign to make borrowers aware of the effort. Additional information is available at www.IndependentForeclosureReview.com or 1-888-952-9105.
Requests for review must be received by April 30, 2012.
“There is no cost to the borrower for this review,” Joe Evers, deputy comptroller for large banks at the OCC, said in a call with reporters Tuesday.
Under the agreement, the servicers are required to foot the bill for the outside consultants conducting the reviews. Evers and other OCC officials said Tuesday that “a great deal of effort has been taken to ensure that the independent consultants are truly independent” and that the servicers will be prohibited from influencing the findings.
While eight consultants are working on behalf of the servicers involved, officials said they had spent months developing a common Web site and call center, as well as common branding and marketing materials, in an effort to make the process equitable for each eligible borrower.
Examples of financial injury might include unwarranted or miscalculated fees charged to borrowers, a foreclosure that happened while a borrower was already in bankruptcy protection, or a property that underwent a foreclosure sale even as the borrower was awaiting word on a loan modification from the servicer.
Details about how long it will take to conduct the reviews, what sort of redress homeowners stand to gain, and what rights they might have to sign away in exchange for compensation remain unresolved.
“These will be thorough reviews, reviewing every aspect of the foreclosure,” Evers said. He said officials hope to complete the reviews in a matter of months after the final deadline, but he acknowledged the mountain of work involved, saying, “It will be a lengthy process to get through this.”
OCC officials on Tuesday also said no decision had been made yet about what type of compensation borrowers will be entitled to if the reviews show they were the victims of errors or misrepresentations. It also remains unclear whether borrowers might be required to waive their right to sue the financial firms involved in exchange for compensation.
“That will be explicit at the time somebody is offered a settlement,” OCC spokesman Bryan Hubbard said. “Before any citizen signs on the dotted line to accept a settlement, they’ll be fully advised of their rights.”
The April deal that led to Tuesday’s announcement also imposed a host of other requirements on the servicers involved, including that they provide a single point of contact for struggling borrowers, many of whom have complained of getting the runaround when they try to get help.
That agreement came after widespread news last fall that banks and servicers had used fake documents, forged signatures and other shortcuts to quickly evict families from foreclosed houses. The revelations prompted many of the nation’s largest lenders to temporarily halt foreclosures and sort through the mess, and prompted a host of state and federal investigations.
The banks that signed the agreement include some of the nation's largest firms, such as Bank of America, Wells Fargo, J.P. Morgan Chase.
OCC officials said the reviews are separate from an effort by a group of state attorneys general and several federal agencies, including the Department of Justice, to craft a settlement with many of the same banks over foreclosure abuses. That effort, which has been more than a year in the making but appears closer to resolution, would include roughly $25 billion in penalties that would go toward slashing the mortgage debt of certain borrowers and helping to prevent future foreclosures.