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Did your lender screw up?

By Polyana da Costa · Bankrate.com
Wednesday, November 2, 2011
Posted: 11 am ET

If your house was in foreclosure in 2009 or 2010 and your mortgage servicer misbehaved, here is some good news.

You can request to have your foreclosure case reviewed by an independent firm. If the reviewer determines that you suffered "financial injury" because of the servicer's "errors, misrepresentations or other deficiencies in foreclosure practices," you may be eligible for compensation, according to federal regulators.

The reviews, which will be offered by 14 mortgage servicers and their affiliates, resulted from a series of enforcement actions that regulators announced this year. The independent review process has just started.

"The independent foreclosure review is a significant component of the mortgage servicers' compliance with our enforcement actions," says John Walsh, acting Comptroller of the Currency. "These requirements help ensure that the servicers provide appropriate compensation to borrowers who suffered financial harm as a result of improper practices identified in our enforcement actions."

The servicers are required to mail out letters to notify borrowers by the end of 2011 who meet the initial eligibility criteria. You should expect to receive a letter and a form to request the review if all of the following are true:

  1. You had a mortgage in the foreclosure process between Jan. 1, 2009, and Dec. 31, 2010.
  2. Your loan was serviced by one of the participating servicers: America's Servicing Co., Aurora Loan Services, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, EverBank/EverHome Mortgage Co., GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia Mortgage, Washington Mutual (WaMu) or Wells Fargo Bank.
  3. The property in foreclosure is or was your primary residence.

After you receive the notification letter, if you think you suffered "financial harm" due to improper actions by the servicer, you can submit a "Request for Review" form -- which will be enclosed with the letter -- by no later than April 30, 2012.

Some examples of common errors that may have caused you financial harm are:

  • The mortgage balance amount shown at the time of the foreclosure action was more than you actually owed.
  • You were doing everything the modification agreement required, but the foreclosure sale still happened.
  • The foreclosure action occurred while you were protected by bankruptcy.
  • You requested assistance or a loan modification, submitted complete documents on time, and were waiting for a decision when the foreclosure sale occurred.
  • Fees charged or mortgage payments were inaccurately calculated, processed or applied.
  • The foreclosure action occurred on a mortgage that was obtained before active duty military service began and while on active duty, or within nine months after the active duty ended and the service member did not waive his or her rights under the Service members Civil Relief Act.

If you have questions about the review or need help completing the form, call the Independent Foreclosure Review at (888) 952-9105.

Follow me on Twitter @Polyanad.

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3 Comments
LizaDawg
November 01, 2011 at 10:50 pm

What about homes that were foreclosed on in 2008? We lived in Michigan and were foreclosed upon while we were negotiating a work out and then forced into a short sale. The first mortgage was partially paid (Avelo mortgage) and the second (chase) took a settlement with no indication of a deficiency balance would be owed until 2 years later. Now we're are being harassed to pay the second mortgage. Does this qualify?