Consumers facing foreclosures often had to deal with lost paperwork, misapplied fees, and clueless customer service representatives. In 20111 bank regulators initiated the Independent Foreclosure Review, a program that allowed borrowers to apply to have an independent consultant take a look at their mortgage file and determine just what went wrong.
Though the program appealed to people desperate for help, it soon became clear that this new review process was more time-consuming than anticipated and difficult to regulate. Thus, it was replaced with another settlement. In this new settlement regulators eliminated the requirement that a borrower would have to submit a claim in order to obtain a payout and everyone who had received a foreclosure notice in 2009 or 2010 would get a check of at least a few hundred dollars. The payment determinations were to be calculated by the banks themselves.
But this decision did not appeal the people that had already applied for a review and had already spent weeks going over documents previously needed to prove their case. Even worse the same banks that had placed them in the foreclosure situation were set to determine just how much money they would receive. Lastly, the fact that the cash would be paid out to more people (approximately 4.4 million) ensured the payouts would be small.
Worst Fears Realized
Soon those worst fears were realized when in April 2013, the average payout was just $865, a much smaller amount than what homeowners had forecast. About 99.7 percent of homeowners received $6,000 or less. Even worse – some checks bounced, and about 400,000 were sent to the wrong address.
Bridget McCready was one such woman. She had tried to save her home in Cape Coral, Fla., when her mortgage company refused her requests for a loan modification. She is amongst the consumers to receive the smallest payout amount. “Well, I cashed it,” she said of her $300 check. “Big whoop.”
For information and guidance on foreclosure, you need the experts at Resnik Hayes Moradi LLP.
Source: Huffington Post, Foreclosure Settlement Still Failing 700,000 Families One Year Later, January 25, 2014