As part of the consent order process, consumers who claim to have been harmed by faulty foreclosures will be able to request a review of their cases and, in warranted instances, be compensated by their servicers.
Federal banking regulators disclosed in April consent orders with the nation’s biggest mortgage servicers.
The orders followed regulatory reviews conducted in the fourth-quarter 2010 of foreclosure practices used by the servicers. The results of the review were outlined in the Interagency Review of Foreclosure Policies and Practices. The report was produced by the Office of the Comptroller of the Currency, the Federal Reserve Board and the Office of Thrift Supervision.
Among the requirements outlined in the consent orders is that the servicers hire independent firms to review their foreclosure actions between Jan. 1, 2009, and Dec. 31, 2010.
In order to identify more potential borrowers who were harmed by faulty foreclosure practices, a complaint process is being rolled out during the next several weeks, Acting Comptroller of the Currency John Walsh said Monday in a prepared speech at the American Banker Regulatory Symposium.
Borrowers who believe that they suffered financial injury from improperly processed foreclosures during 2009 or 2010 will be able to request a review of their case. Potential victims will be alerted through methods that include direct mail and advertising campaigns.
Regardless of which servicers handled their loans, impacted borrowers will be directed to a single claims processing center with common intake forms, a single Web site and a common phone number.
Once a review is requested, the borrowers will be provided with confirmation of the request. More information could be requested.
Cases will be reviewed by independent consultants who will identify financial injury or harm under the consent orders. Servicers will be required to provide documentation and explain facts and decisions tied to the foreclosures.
Reviews are expected to take several months, and the independent consultants will develop foreclosure review reports that identify financial injuries and recommend remediation. Servicers will use the reports to develop and submit OCC- and Fed-approved remediation plans required by the orders.
Each case will be treated independently, and remedies can vary significantly.
“Remediation and restitution will not be approached as a one-size-fits-all proposition,” Walsh stated. “It will depend on the facts of the individual case and that requires thorough and careful consideration, as well as a strong quality control process to ensure each institution is treating cases of financial harm in a consistent way.”
Once the reviews are complete, letters will be sent to the harmed consumers explaining the outcome and outlining potential restitution.
