Firm Commentary: This office previously advised California Homeowners in financial distress that the “independent foreclosure review” process, set up by the FED and the OCC was nothing more than a sham designed to enrich the insider consultants who were charged with processing….and systemically denying…relief to affected borrowers. The program that was supposed to give homeowners an opportunity to have unbiased third-party reviews of their foreclosure and determine whether they might qualify for a cash payout of up to $125,000. The program failed miserably and demonstrated another example of our beholden Federal government allowing the “fox to guard the chickens” at the expense of citizens in need. At least now the FED and the OCC agree and announced an $8.5 billion settlement with 10 large mortgage companies on Monday in a surprising deal that will end a much-derided foreclosure review. In its place, the regulators announced a “new settlement”. The Office of the Comptroller of the Currency and the Federal Reserve, the mortgage companies will make $3.3 billion in direct payments to “eligible borrowers” whose foreclosures were handled improperly, and will make $5.2 billion available in other assistance to struggling borrowers, such as loan modifications.
According to the OCC website, http://www.occ.gov/news-issuances/news-releases/2013/nr-ia-2013-3.html, “A payment agent will be appointed to administer payments to borrowers on behalf of the servicers. Eligible borrowers are expected to be contacted by the payment agent by the end of March with payment details. Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. In addition, the servicers’ internal complaint process will remain available to borrowers.” I’ll believe it when I start seeing checks for my clients.
Read more at the Huffington Post at: http://www.huffingtonpost.com/2013/01/07/banks-foreclosure-settlement_n_2424887.html. Article below by Ben Hallmanben.email@example.com
WASHINGTON — Federal bank regulators announced an $8.5 billion settlement with 10 large mortgage companies on Monday in a surprising deal that will end a much-derided foreclosure review in favor of a new program that authorities say will distribute aid to homeowners “significantly more quickly.”
Under the deal, announced by the Office of the Comptroller of the Currency and the Federal Reserve, the mortgage companies will make $3.3 billion in direct payments to “eligible borrowers” whose foreclosures were handled improperly, and will make $5.2 billion available in other assistance to struggling borrowers, such as loan modifications.
“The OCC and Federal Reserve accepted this agreement because it provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process,” the regulators said in a joint statement.
This new deal is separate from the $25 billion mortgage settlement to which five large banks agreed earlier this year, though many of the allegations of misconduct are the same. Homeowners have complained for more than five years that the mortgage companies made widespread errors in the management of their home loans, and that in some cases those errors pushed them into foreclosure.
The new settlement Monday replaces a deal struck in April 2011 that established the Independent Foreclosure Review, a program that was supposed supposed to give homeowners an opportunity to have an unbiased third-party review their foreclosure and determine whether they might qualify for a cash payout of up to $125,000. Scrapping a previously agreed-to legal deal, especially one as high-profile and complex as the Independent Foreclosure Review, is highly unusual, and a tacit acknowledgement of the program’s failure.
“[It] has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers. Our new course of action will get more money to more people more quickly, and it will speed recovery in the nation’s housing markets,” said Comptroller of the Currency Thomas Curry in a statement.
The Independent Foreclosure Review was troubled from the start. Homeowners and advocates complained that the application forms were confusing and that information about what type of compensation they might get was missing. Some told HuffPost that they were so disillusioned by the federal government’s anemic response to widely reported bank errors that they weren’t going to bother to apply.
The program has also been dogged by questions about its independence. ProPublica, an investigative nonprofit, found that supposedly independent third-party reviewers looking over Bank of America loan files were given the “correct” answers in advance by the bank. These reviewers could override the answers, but they weren’t starting from a blank slate.
It’s not clear what factors led banking regulators to abandon the program in favor of a settlement, but as HuffPost reported last week, the final straw may have been a pending report that was critical of the program by the Government Accountability Office, a nonpartisan investigative arm of Congress, which was investigating the review program.
It’s also not clear exactly what will happen to the 495,000 homeowners who had applied for a review as of December. Bryan Hubbard, an OCC spokesman, said these homeowners “will get more compensation” than homeowners who did not apply, but said he could not further comment on the process. All told, 3.8 million homeowners are in the “scope” of the foreclosure review, and all of these homeowners will receive some form of compensation, ranging from a few hundred dollars to $125,000, Hubbard said.
“As a result of this agreement, the participating servicers would cease the Independent Foreclosure Review, which involved case-by-case reviews, and replace it with a broader framework allowing eligible borrowers to receive compensation significantly more quickly,” the regulators said in their statement.
Eligible borrowers will receive a call from a payment agent by the end of March, the OCC and Federal Reserve said.
The settlement agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.
The original deal included four additional mortgage companies: Ally Financial, EverBank, HSBC and OneWest Bank. The reviews on those loans will continue and are not affected by the settlement.