About 4.5 million current and former home owners will be eligible to have their foreclosure cases reviewed, and banks will compensate them if mistakes are found, as part of a mandate by federal regulators to the nation’s banks.
Borrowers eligible for the reviews must have been in some stage of foreclosure in 2009 or 2010. If the reviews uncover such things as banks’ miscalculating mortgage payments or applying impermissible fees of penalties, the borrower may be eligible for compensation from the banks, The Wall Street Journal reports. No foreclosures are expected to be overturned following reviews, however.
“It’s a substantial undertaking at great expense to the banks,” Tim Rood, a partner at Collingwood Group, told The Wall Street Journal.
A public outreach campaign in the coming weeks is expected to announce the third-party reviews and reach out to eligible borrowers through direct mail, a web site and toll-free number. Borrowers will need to request a review of their case.
Federal regulators have ordered the banks to conduct the reviews following a “robo-signing” scandal that surfaced last fall, in which regulators uncovered lenders signing off on numerous foreclosures without proper reviews. “Robo-signing” caused judges to question the validity of banks’ foreclosure practices.
Source: “Review of Foreclosure Mistakes Is Set,” The Wall Street Journal (Oct. 4, 2011)
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