Wrongful Foreclosure

With foreclosures on the rise in recent years, the number of erroneous and mishandled foreclosures has also risen dramatically. Fortunately, up to 4.5 million homeowners who have endured such abuses may be able to claim compensation for their ordeals.

Federal bank regulators have drawn up a process by which homeowners who believe they were wrongly foreclosed upon can request an independent review of the process to see if any errors or misrepresentations were made by banks or loan servicers.

The move will bring more accountability to the foreclosure process and the mortgage servicing industry. One target is banks who sought to get around paperwork requirements and accelerate the foreclosure through a process known as "robo-signing." The measures are also expected to bring an end to the practice of "dual tracking," in which banks move ahead with foreclosures even when homeowners are in the process of requesting loan modifications.

The independent reviews are being mandated by the Office of the Comptroller of the Currency in tandem with the Federal Reserve and the Office of Thrift Supervision.

To apply for a review, the homeowner must have had his or her primary residence in the process of foreclosure in 2009 or 2010.

If a review finds that a homeowner was wrongly foreclosed upon, that homeowner will at least be entitled to monetary compensation from the responsible bank, although a loan modification or even restoration of the property are not out of the question.

Participating mortgage servicers will mail notices to borrowers qualifying for review. Borrowers may also take their own steps to apply by visiting www.independentforeclosurereview.com.

The deadline to apply for a review is April 30, 2012. Homeowners should expect the review process to take several months to complete.

"This is another step toward fixing what is broken in the mortgage servicing and foreclosure process...Our enforcement actions require wrongful financial injuries to be remediated."  --  Bryan Hubbard, spokesman for the Office of the Comptroller of the Currency

Servicers Participating in the Program

America's Servicing Co., Aurora Loan Services, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, EverBank/Everhome Mortgage, First Horizon, GMAC Mortgage, HFC, HSBC, IndyMac, MetLife, National City, PNC, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia, Washington Mutual, Wells Fargo.