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Independent Foreclosure Review

Much has been made in recent months and years of the bad behavior on the part of the banks (and loan servicers– the companies that send borrowers their mortgage statements and collect their payments) that have made the foreclosure crisis even worse than imaginable.

Now the Office of the Comptroller of the Currency, the Federal Reserve and other federal agencies are requiring banks that violated consumer protections, causing “financial injury,” to fix or redress them.

Specifically, independent auditors (well, as independent as they can be when hired and paid by the Banks) are now are reviewing foreclosure cases to determine what errors were made and what compensation might be available.

The reviews will try to determine whether the servicer or attorney properly documented ownership of the mortgage and whether it was done under state and federal law. The consultants will be charged with deciding if a foreclosure sale occurred while the borrower was in a modification or under consideration for some other loss-mitigation tool, such as a short sale. The reviews will cover any inappropriate fees charged outside of state or federal law. Interestingly, the consultants will also check to see if guidelines for HAMP and even the banks’ own proprietary program were followed correctly. Then, the review will seek to determine if any of these errors or misrepresentations resulted in direct financial injury. The review process is described in detail in a newly issued OCC report entitled, Interim Status Report: Foreclosure-Related Consent Orders.

To be considered in scope and eligible to request a review, a borrower must meet three criteria:

(1) The loan must have been active in the foreclosure process between January 1, 2009 and December 31, 2010 [this means that—(a) The property was sold due to a foreclosure judgment; (b) The mortgage loan was referred into the foreclosure process, in which case the borrower may have been notified in writing, but was removed from the process because payments were brought up-to-date or the borrower entered a payment plan or modification program; (c) The mortgage loan was referred into the foreclosure process, in which case the borrower may have been notified in writing, but the home was sold or the borrower participated in a short sale or chose a deed-in-lieu of foreclosure; or (d) The mortgage loan was referred into the foreclosure process, in which case the borrower may have been notified in writing, and remains delinquent today but a foreclosure sale has not taken place];

(2) The property securing the loan must have been/must be the borrower’s primary residence; and

(3) The loan was serviced by either—America’s Servicing Company; Aurora Loan Services; Beneficial; Chase; Citibank; CitiFinancial; CitiMortgage; Countrywide; EMC; Everbank/Everhome; GMAC Mortgage; HFC; HSBC; IndyMac Mortgage Services; Metlife Bank; National City; PNC Bank of America; Sovereign Bank; SunTrust Mortgage; U.S. Bank; Wachovia; Washington Mutual; and/or Wells Fargo.

Homeowners that meet the eligibility criteria and whose situation and resulting financial damages are deemed to rise to the appropriate, while undisclosed level, can now file a “Request for Review” form with the OCC for potential remediation.

If you’re eligible—and many of law firm’s clients may be eligible–you’re supposed to get a letter by mail before Dec. 31 with information, directions and a form to return.

The form has to be postmarked by April 30, 2012.

The danger is that scammers, con artists and other unethical actors will seek to charge homeowners an exorbitant fee for little service or results.   Thousands of homeowners are all but certain to get ripped off for thousands of dollars and right before the holidays too.

Moreover, those who accept a settlement under this Independent Foreclosure Review may waive other rights.

If you got a solicitation letter, or think you are eligible, call a lawyer for a free consultation.