Current Weather
The Spy FM

Foreclosure Review Is Free, But Few Borrowers Apply

Filed by KOSU News in US News.
May 9, 2012

It’s been more than six months since government regulators and banks first extended an offer to 4.3 million homeowners facing foreclosure: to review, at no cost, the foreclosure process to check for any possible errors or misrepresentations.

Homeowners stand to collect compensation of as much as $100,000 if errors are found. But thus far, only a tiny percentage of those eligible have signed up.

‘Not Enough Folks Have Signed Up’

The push for a review process was set in motion by the “robo-signing” scandal. In 2010, several banks admitted mishandling some foreclosure documents. Some borrowers may have wrongfully lost their homes as a result, and the scandal exposed systemic problems in the foreclosure process.

In the wake of the scandal, federal bank regulators required 14 mortgage companies to establish the Independent Foreclosure Review process.

The review costs homeowners nothing, but at last count, only 165,000 people — fewer than 4 percent of those eligible — have applied.

The original April 30 deadline has since been extended to July 31.

Last month, Housing and Urban Development Secretary Shaun Donovan tried enlisting a group of housing counselors to get more homeowners to sign up for the review.

“I am concerned that not enough folks have signed up, and that we’re going to waste that opportunity,” Donovan said.

Donovan says the process presents the first real opportunity for most troubled homeowners to get an independent read on whether their case was — or is — being handled appropriately.

Fraught With Complications

John Taylor, CEO of the homeowners advocacy group the National Community Reinvestment Coalition, says it’s no surprise consumers haven’t responded in droves.

“Consumers are tired of listening to folks who are promising them they’ll help them, and all they do is charge fees,” Taylor says. “There are tons of scammers out there.”

Like so many other things having to do with foreclosures, Taylor says the Independent Foreclosure Review program is fraught with challenges and complications.

He says most borrowers avoid direct mail, and many no longer even live at their old address. In addition, Taylor says the official program website, which bears no official government logos, looks untrustworthy.

And, he says, it took the banks more than six months to send the letters to those who qualified — giving homeowners less time to respond.

“It doesn’t really connote a genuine commitment to really helping the amount of people who could have been, and may have been, abused in this process,” Taylor says.

“The response rate is really not our focus,” says Bryan Hubbard, spokesman for the Office of the Comptroller of the Currency, one of the federal agencies administering the program. The government, he says, cannot force people to take advantage of the program.

“It’s always a risk that people will ignore mailings,” Hubbard says. “But that’s one of the reasons we required advertising. It’s one of the reasons we’re doing public service announcements, and it’s one of the reasons we’re doing [media] interviews.”

The marketing effort, paid for by the banks, includes three rounds of print advertising in different languages. Separately, the government has run public service announcements in small publications and on 6,500 radio stations around the country.

Restitution Guidelines Forthcoming

Hubbard says some homeowners’ cases may be reviewed, even if they don’t apply. A sampling of foreclosure cases are being pulled from the banks’ records to be scanned for mistakes.

Paul Leonard, a senior vice president at the Financial Services Roundtable, which represents the participating lenders, says cynics may think the banks have little incentive to get the word out, but says that’s simply not the case.

“Virtually everyone involved in this wants to do it right,” he says.

In the coming weeks, regulators will release guidelines for how much homeowners with legitimate grievances should receive in compensation.

Restitution payments will range from several hundred dollars to more than $100,000 for the gravest errors. The funds are separate from the $25 billion national bank settlement announced earlier this year. [Copyright 2012 National Public Radio]

Leave a Reply

5AM to 9AM Morning Edition

Morning Edition

For more than two decades, NPR's Morning Edition has prepared listeners for the day ahead with two hours of up-to-the-minute news, background analysis, commentary, and coverage of arts and sports.

Listen Live Now!

9AM to 10AM The Takeaway

The Takeaway

A fresh alternative in morning news, "The Takeaway" provides a breadth and depth of world, national and regional news coverage that is unprecedented in public media.

View the program guide!

10AM to 11PM On Point

On Point

On Point unites distinct and provocative voices with passionate discussion as it confronts the stories that are at the center of what is important in the world today. Leaving no perspective unchallenged, On Point digs past the surface and into the core of a subject, exposing each of its real world implications.

View the program guide!

Upcoming Events in your area (Submit your event today!)

Streaming audio and podcasts

Stream KOSU on your smartphone

Phone Streaming

SmartPhone listening options on this page are intended for many iPhones, Blackberries, etc. with low-cost software applications available to listen to our full-time web streams, both News on KOSU-1 and Classical on KOSU-2.

Learn more about our complete range of streaming services

We're perfecting the patient experience - Stillwater Medical Center