Millions of Homeowners Mistreated By Flawed Foreclosure Review Process
Yet another new study shows homeowners struggling to save their homes are not getting the help they were promised from government programs.
Countless homeowners fell victim to predatory lending practices within the mortgage industry over the course of just a couple of years in the United States. A review process was set up that required a number of mortgage lenders to review the records of those who lost their homes and pay them back for the errors, when applicable. However, a recent study found that the review and notification process is also flawed, potentially keeping four million foreclosed homeowners from getting the assistance they so deserve.
A Broken Review Process
A governmental report found several flaws in the review process that may prevent eligible homeowners from understanding what they can do to obtain compensation to which they may be entitled. The report uncovers a broken system and highlights how settlements with mortgage services do not brighten the outlook for homeowners who fell victim to predatory lenders.
The group in charge of the review process - appropriately named the Independent Foreclosure Review Process (IFR) - sent letters to homeowners notifying them of their eligibility for relief but the letters are hard to understand and do not make it clear what types of compensation may be available to homeowners.
The letters are time-sensitive and do not allow enough guidance for wronged homeowners to know where to turn for assistance with claims. Furthermore, the IFR has no system in place to track who is responding to the letters and applying for a review. The letters are most often in English. IFR officials have no idea if minority groups are obtaining fair access to relief. It is clear that English-speaking groups are also experiencing significant problems and delays.
Most recently, the IFR sent out letters to candidates qualifying for review that they would need to file additional applications and forms. The IFR's slow response and requests for further information assures that the process will be further delayed.
Recommendations for Improvements
This pattern of continuous requests for further information and flawed review has disastrous results for homeowners. Regulators would like to make several changes. First, regulators would like to get rid of the difference in treatment of borrowers who were unfairly denied loan modifications and those who were foreclosed upon during a forbearance plan. Eliminating this discrepancy will help make the process fair and efficient.
The regulators would also like to increase the compensation that borrowers receive for other bank errors discovered during the review process and give borrowers the right to appeal a decision not in their favor. They would also like to add more transparency to the review process.
Regardless of these suggestions and hoped for revisions, the real problem is that neither the banks, nor the regulators, nor the multiple parties reviewing the regulators are proceeding in the efficient manner required to provide meaningful relief for homeowners.
The truth is that homeowners need immediate relief and not perpetual reviews by banks and regulators and the IFR. If you have received a notice of eligibility for a review of your foreclosure but do not understand how to apply for a review of your foreclosure, contact an experienced foreclosure and loan modification lawyer who can help you understand the letter and understand how the process may help you.