Florida residents wronged during a foreclosure could receive up to $125,000 in compensation through a federal program launched in November, but just 3 percent of homeowners contacted statewide have applied to have their cases reviewed.
More than 625,919 Florida homeowners, or previous owners, were sent letters by the Office of the Comptroller of the Currency alerting them they are eligible for a free foreclosure review. If lender misconduct is found during the audit it may result in financial fixes that range from the correction of a credit report to $125,000.
As of the end of May, just 20,212 Floridians requested the review. Nationwide, 4.3 million letters were mailed with about 4.4 percent of recipients -- 193,630 -- asking to be included in the program, called the Independent Foreclosure Review.
The deadline for applications was extended for the second time last month to Sept. 30 when the comptroller's office also announced new monetary guidelines that will be used to award damages.
While some of the bank failings eligible for compensation cut a large swath, such as not soliciting people for a loan modification or not approving a modification within a specific timeframe, there is concern that the plan is an empty promise.
"If you're waiting for the government cavalry to ride in and make everything alright, I'm sad to say you'll be waiting a long time," said foreclosure defense attorney Roy Oppenheim, of Oppenheim Law in Weston. "Time and time again homeowners have looked to government programs for justice, but with a decidedly mixed bag of results."
In the new compensation framework, a homeowner whose loan modification was mistakenly denied could be eligible for $5,000, have their foreclosure rescinded and a new lower loan payment approved. A person whose home was repossessed during a trial loan modification period could receive the full $125,000 if the lender is unable to rescind the foreclosure.
Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency, said the nearly 200,000 applications received is a significant number and that it's unfair to compare that to the 4.3 million letters sent. The letters, he said, went to everyone who faced a foreclosure during the eligibility period of 2009 and 2010 and not just the number of people who may have been financially harmed because of lender wrongdoing.
"I would not characterize the number as a few," Hubbard said about the applications received.
The audit is part of an agreement reached in April 2011 by bank regulators and the nation's largest mortgage servicers after revelations that deficient foreclosure documents were used to repossess homes. The program, which is separate from the $25 billion attorneys general settlement reached in February, is also selecting files on its own to review. The total number of files slated for review is 338,447.
Some homeowner advocates say a lack of awareness as well as distrust of foreclosure rescue schemes could be hurting participation.
Struggling homeowners, already under a daily mail assault, may unwittingly toss the review offers, which advocates said are written in legalese more appropriate for attorneys than borrowers. Just 5.3 percent of the letters came back as undeliverable.
"Both the cover letter and the form appear to have been written by lawyers for lawyers," said Alys Cohen, an attorney with the National Consumer Law Center, during congressional testimony last year. "The name, 'independent foreclosure review,' sounds like something dreamed up by a foreclosure rescue scammer."
Oppenheim said while some "meaningful forms of restitution" are offered by the program, many scenarios faced by homeowners are omitted, including so-called robo-signing.
Robo-signing, which can include perjury and forgery on foreclosure documents used in court, temporarily halted foreclosures nationwide in November 2010 as lenders acknowledged paperwork problems.
"In the 14 possible violations detailed in the framework for the Independent Foreclosure Review process, you won't find the word fraud," Oppenheim said.
The framework does list the failure of a bank to have "standing", or the right to repossess a home, but the remedy is listed as "remediation determined on a case-by-case basis."
"I'm not suggesting you shouldn't apply for a review," Oppenheim said. "But what I am saying is you can't count on it to rescue you."
For more information, go to www.independentforeclosurereview.com or call 1-888-952-9105. Homeowners wronged during a foreclosure could receive between $1,000 and $125,000 depending on the error.
Loan modification never solicited by servicer; offer loan modification, pay $1,000.
Loan modification application denied in error; rescind foreclosure, pay $5,000.
Foreclosure occurred during a trial loan modification; rescind foreclosure, pay $15,000.
Foreclosure completed while borrower paid on a forbearance plan; if rescission of foreclosure is not possible, pay $60,000 plus equity.
Foreclosure completed during a trial loan modification; if rescission of foreclosure is not possible, pay $125,000 plus equity.
How you can qualify for a review
Eligibility requirements include:
Must have been in some process of foreclosure between Jan. 1, 2009, and Dec. 31, 2010.
Servicer was one of 27 participating in the review. For a list, go to www.independentforeclosurereview.com.
Property is your primary residence.
Source: Office of the Comptroller of the Currency
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