Homeowners to receive up to $125,000 for foreclosure abuses

The deadline to request an Independent Foreclosure Review has been extended to January 18, 2013.

Homeowners who were victims of foreclosure abuses during 2009 and 2010 could receive more than $125,000 from lenders. Borrowers seeking a review of their mortgage foreclosures under the federal banking agencies' Independent Foreclosure Review now have until January 18, 2013 to submit their claims.

Eligible Michigan borrowers had mortgages serviced by Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo, the nation's five largest mortgage servicers that agreed to the settlement with the federal government and attorneys general for 49 states and the District of Columbia. Only a fraction of potentially eligible borrowers have responded to a letter from their bank.

Postcards are currently going out to approximately 148,000 Michigan potentially eligible homeowners from the National Mortgage Settlement administrator. In addition, official packets are being mailed to these same homeowners from Michigan Attorney General Bill Schuette’s office with claim forms. Schuette urges eligible Michigan borrowers to complete their claim forms and return them as soon as possible in the envelope provided. Borrowers also have the option of filing claims online. The deadline for all claims is January 18, 2013. Schuette noted that payment checks are expected to be mailed in mid-2013.

Schuette encourages borrowers with questions about completing the claim form to contact the settlement administrator, toll-free, at 1-866-430-8358 or by sending an email. The toll-free hotline is staffed from 8 a.m. to 6 p.m. EST. If the homeowner worked with a non-profit housing agency counselor, supporting documentation may be available from the housing agency.

The Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (Federal Reserve) are involved with the Independent Foreclosure Review.

If the review finds that financial injury occurred, the borrower may receive remediation such as lump-sum payments, 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. Lump-sum payments can range from $500 to $125,000 plus equity, according to guidance issued by the agencies. 

Examples of possible victims are:

  • Service members who lost their homes to foreclosure while on active duty
  • Borrowers who were put into foreclosure even though they were not in default
  • Borrowers who went into foreclosure after or during trial modifications
  • Errors and other issues with loan modification applications
  • Other errors and abuses by servicers, like robo-signing, using wrong interest rates on approved applications or initiating foreclosure while borrowers were protected by federal bankruptcy laws

There are no costs associated with being included in the review. Schuette says to beware of scams, including anyone requesting personal information and offering to "speed your settlement" or "help you gain access" to benefits. If you are unsure if you have been contacted by a scammer, file a complaint with the attorney general’s office immediately.

A servicer is not permitted to require a borrower to sign a waiver of the borrower's ability to pursue claims against the servicer in order to receive compensation under the Independent Foreclosure Review.

Michigan State University Extension provides free housing counseling at its Macomb, Lapeer, Ionia and Washtenaw County offices to surrounding areas. MSHDA certified Housing counselors may be located using the MSHDA’s search tool.

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