The clock is ticking for borrowers who believe they were abused in the foreclosure process to seek an independent review of their case.
Under terms of federal enforcement actions last year with 14 major mortgage companies – including divisions of Atlanta-based SunTrust Banks, and prominent lenders such as Wells Fargo and Bank of America – borrowers can apply for a review of foreclosures of primary residences that took place in 2009 and 2010. They could be eligible compensation of up to $125,000 if abuses are found. The deadline is Dec. 31.
In the wake of the foreclosure crisis, mortgage firms have been accused of foreclosing on mortgages they didn’t own, failing to provide proper notice of default or foreclosing while a borrower had the protection of bankruptcy or was under a loan modification plan.
The federal government stepped in with censures and demanded the banks fix mortgage servicing breakdowns and compensate affected borrowers.
The review process has come under criticism for a lack of independence from the banks, which hired the consultants to conduct inquiries. Some banks are doing reviews and determining compensation levels themselves, according to a report last month by ProPublica, an investigative journalism nonprofit. Banks and regulators have denied the claims.
Sarah Bolling Mancini, an attorney who helps troubled borrowers at Atlanta Legal Aid Society, said she shares concerns about the independence of the review process, but said there is little downside for applying. Borrowers who apply do not give up their right to sue.
“For most people, there’s no harm in trying it,” Mancini said, though she suggests borrowers consult with an attorney if they are already involved in a lawsuit or plan litigation.
Mortgage firms have sent nearly 180,000 letters to Georgians saying they might qualify for compensation, according to data from the Federal Reserve. Only 11,519, or 6 percent, had filed a review request as of Sept. 30.
Mancini said borrowers who submit requests should be as detailed as possible about their experiences. For more information about the reviews, and for a list of mortgage companies, go to independentforeclosurereview.com.
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