The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board both announced Tuesday that the independent foreclosure reviews of 14 large servicers issued in April are now under way.
About 4.5 million borrowers could have their loans reviewed and potentially be compensated for imposed financial hardship, according to a previous statement by the OCC.
According to the OCC, the review will take several months due to the volume of potential foreclosures to review.
The foreclosure review is part of a broader list of enforcement actions for the servicers to rectify missteps in the foreclosure process. The enforcement actions mandated by the OCC include improved borrower communications, greater oversight of third-party vendors, updated management information systems, and the elimination of “dual tracking” – which takes place when a servicer forecloses while a borrower is being considered for a modification.
The OCC issued enforcement actions to: Ally’s GMAC Mortgage, Aurora Bank, Bank of America, Citibank, EverBank, HSBC, JPMorgan Chase, MetLife, OneWest, PNC, Sovereign Bank, SunTrust, U.S. Bank, and Wells Fargo.
The Federal Reserve Board issued similar mandates in April and is also requiring the four large servicers it oversees – GMAC , HSBC, SunTrust, and JPMorgan’s EMC Mortgage – to appoint a single point of contact to certain distressed borrowers.
“The independent foreclosure review is a significant component of the mortgage servicers’ compliance with our enforcement actions,” said acting Comptroller of the Currency John Walsh. “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.”
Independent consultants will begin reviewing cases in which borrowers believe they suffered financial harm due to foreclosure actions that occurred between 2009 and 2010.
Servicers began mailing letters to borrowers Tuesday explaining the process of requesting a review, according to the OCC.
If independent reviewers determine a borrower did face financial harm due to misrepresentations or errors by the servicer, the servicer will be required to compensate the borrower.
“Borrowers are encouraged to carefully consider the information about the review program to determine if they should participate,” stated the Fed in its Tuesday announcement. “There are no costs associated with being included in the review.”
The Fed is also calling on independent reviewers to conduct a comprehensive examination of certain categories of foreclosures. For example, they will look for violations of the Servicemembers Civil Relief Act and review all cases in which a borrower filed a complaint about their foreclosure proceeding.
Borrowers’ requests for reviews will be accepted through the end of April.
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