by Broderick Perkins
Fourteen financial institutions are under federal orders to perform independent reviews of an estimated 4.5 million foreclosures.
The order is designed to ferret out questionable procedures and to provide restitution for any consumers who've been financially harmed by the procedures.
The order could also delay existing foreclosures.
The enforcement action orders lenders and mortgage servicers to correct deficiencies in their servicing and foreclosure processes and to engage independent firms to conduct independent reviews of foreclosure actions that occurred in 2009 and 2010.
The order stems from a host of questionable procedures the Feds investigated, including:
The practice of "dual tracking" - simultaneously engaging a homeowner in a loan modification, while foreclosing on the property.
Using "robo-signing"to finalize foreclosures. Robo-signing is the practice of employees, dubbed "robo-signers," who vouched for the accuracy of foreclosure documents without reading them, by signing another person's name or otherwise effectively forged documents or signed off on them with a questionable approach.
Losing and misplacing documents, not keeping records of contact with homeowners, and asking homeowners to repeatedly submit the same documents.
"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," Walsh added.
To expedite the order, federal agencies are mailing notices of the available reviews to the 4.5 million consumers, they've set up a IndependentForeclosureReview.com web site and opened a hot line, 1-(888) 952-9105, which is available Monday through Friday, 8 a.m. to 10 p.m. or Saturday, 8 a.m. to 5 p.m. Eastern Time.
Notices will go out by Dec. 31, 2011 and consumers must request a review no later than April 30, 2012. The individual reviews could take months to complete and will cover foreclosure actions against primary homes only.
Not every homeowner will receive compensation and remedies could vary based on the level of harm, regulators say.
Under the order, if a foreclosure sale is scheduled and a review is underway, the sale will be postponed until the review is complete.
Other homeowners who could be available for reviews could be those who experienced foreclosure action, but brought their loans current, modified them or completed short sales or deed-in-lieu deals.
The lenders and servicers included in the order are America's Servicing Co.; Aurora Loan Services; Bank of America; Beneficial; Chase; Citibank; CitiFinancial; CitiMortgage; Countrywide; EMC; EverBank/EverHome Mortgage Company; 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); and Wells Fargo Bank, N.A.
The reviews will attempt to ferret out, among other wrong doings:
Incorrectly figured mortgage balances.
Foreclosure actions taken while consumers were protected by bankruptcy laws.
Foreclosure sales occurring even though homeowners were in compliance with a modification agreement.
Fees inaccurately calculated or applied.
Walsh said the reviews will take several months to complete, considering the large pool of borrowers that could be part of the review.
"We will oversee the independent consultants to make certain they conduct the reviews in an independent and responsible manner," Walsh said.
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