Complaints from homeowners who believe they have been victims of illegal foreclosure practices are widespread.
Yet, when millions of borrowers were offered an opportunity to have their foreclosure files reviewed so they could get compensated for the wrongdoing, few accepted the opportunity.
As a result of the robosigning scandal, regulators last year required several mortgage servicers to send letters to borrowers whose primary home was in any stage of foreclosure in 2009 or 2010 and offer them a chance to have their cases reviewed. In cases where an independent reviewer finds wrongdoing, the borrowers may receive compensation (ranging from hundreds to thousands of dollars).
More than 4.3 million request-for-review forms were mailed out as of last month. Of those, about 121,000, or 3 percent of borrowers, replied.
The deadline to reply was April 30, but regulators have extended it to July 31. They've also required servicers to reach out to borrowers again with another letter in June.
Is anyone there?
Do these four million borrowers think their foreclosure process was perfect? Do they not feel like they are entitled to compensation?
It's possible many of them haven't even received this letter, says John Taylor, president and CEO of the National Community Reinvestment Coalition. Many of these homeowners may have moved and/or lost the home to foreclosure.
The OCC claims address tracing methods are being used to reach borrowers who lost their home to foreclosure and says only 5.6 percent of letters were returned as undeliverable.
Did anyone read it?
Even if you assume the borrowers received the letter, it's likely they didn't read it, Taylor says. Maybe they thought it was a scam or simply didn't think it was worth replying, he says. To request the review, borrowers must fill out a five-page form.
Remember you're talking about borrowers who went through the frustration of dealing with numerous foreclosure-related notices in the mail.
"They don't want to open any bank letters, any official letters. They (assume) it's not good news. (Regulators) have no clue on how to communicate with people who've been through disasters," Taylor says.
Are regulators trying hard enough?
He suggests the best way to reach out to these borrowers is through local, community and housing counseling groups. Regulators must simplify the process, he says.
The OCC says the outreach efforts include print and online advertising. Borrowers can also request a form at www.independentforeclosurereview.com or by calling the toll-free number: (800) 952-9150.
The form walks borrowers through examples of situations that would be likely examples of financial injury such as: "You were doing everything in the modification agreement required, but the foreclosure sale still happened."
Of the few borrowers who replied so far, about 87 percent involved modification issues, according to the OCC. About 62 percent claim the recorded mortgage balance was not correct; 47 percent cites improper fees and refer to payment processing errors.
Borrowers: Speak up!
As Taylor says, it's "a little late in the process to be saying, 'We're from the government. We're here to help,'" but borrowers who believe they were victims of illegal foreclosure practices should use these forms to speak up.
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