Borrowers only have until next month to request a review of faulty foreclosures in order to be considered for compensation. The reviews were required as a result of consent orders issued last year against the biggest mortgage servicing firms.
Fourteen servicing-related firms agreed in April 2011 to consent orders issued by the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.
In addition to correcting deficient servicing practices, the consent orders required borrowers to be given the opportunity to have their cases reviewed to determine if they were handled improperly by one of the servicers.
Independent firms have been hired to review foreclosure actions between Jan. 1, 2009, and Dec. 31, 2010, and determine whether foreclosures were compliant with federal and state laws, if they happened when loans were current and whether any errors, misrepresentations or other deficiencies led the borrower to suffer financial injury.
Borrowers who are found to have been harmed could received lump-sum payments, which can be as much as $125,000 in the “most egregious cases,” or other remediation including suspension or rescission of a foreclosure, a loan modification or other loss mitigation assistance, correction of credit reports, or correction of deficiency amounts and records.
The deadline to request a review was originally set for Sept. 30, but the Federal Reserve Board and the OCC in August extended the deadline until Dec. 31.
In a joint announcement Tuesday warning that the deadline is fast approaching for borrowers to request a “free, impartial review,” the Fed and OCC noted that servicers were directed in August to conduct additional outreach to increase awareness of the independent foreclosure review.
The regulators have kicked off print, radio, television and online ad campaigns about the impending deadline targeting the hardest-hit communities.
Other outreach efforts include direct contact with eligible borrowers by postal mail, e-mail and telephone as well as coordinated activity by community, housing and faith-based groups.
