Banks have begun a foreclosure-review process to award compensation to homeowners who have been harmed by foreclosure-processing problems that came to light earlier this year, including robo-signing.
Tens-of-thousands of foreclosures are under review after lenders admit to robo-signing scandal.
It is unclear, however, how many borrowers will benefit from the reviews. The lead up to the formal disclosure of reviews found banks unhappy about the effort the process requires, while advocates for borrowers complained that the process wasn’t transparent and didn’t truly hold banks accountable for past errors.
The review process is being handled by outside consultants hired by banks, and letters are being sent to over four billion borrowers who were in some stage of the foreclosure process in the past couple of years. The letters inform them that they may be eligible for review.
The reviews are an effort to address issues that were revealed a year ago over the robo-signing scandal, wherein banks allegedly had employees sign off on a large number of foreclosures and falsely claimed that they had reviewed each case.
Banks claim, however, that little to no cases were found where borrowers went through foreclosure without being in default on their mortgage. Some homeowners say that their homes were sold through foreclosure while they were in the process of negotiating a loan modification.
Borrowers that are eligible are those who reviewers determine to have suffered financial harm, which would include those who lost their homes to foreclosure while they were protected in bankruptcy. It’s unclear what type, and to what extent, documentation will be used to determine whether borrowers were harmed – as no interview will be conducted, borrowers can only provide documentation.
Of course, an issue arises wherever borrowers failed to keep thorough documentation of their foreclosure process, which is needed to verify if their foreclosure was fair. It may be that the entire review process is just a way of making it seem.
See also:
Borrowers May be Eligible for Relief from Lender Errors
Mortgage Company Employees Admit to Illegally Processing Foreclosures
New home financing
New Homes Section is a leading provider of new housing and home builder information. 
Trackbacks / Pings