Recently, the Federal Government has instituted 2 programs to assist home owners who have lost their homes or are struggling to stay in their homes that are often underwater.
Independent Foreclosure Review
Information on this can be found at http://www.federalreserve.gov/consumerinfo/independent-foreclosure-review.htm
This program is being overseen by the Federal Reserve and covers any foreclosure actions that occurred in 2009 and 2010. Qualified borrowers of this program are notified by mail. The first mailings were sent out on November 1, 2011 and if you received a notice, the deadline to request the review is April 30 2012.
The Federal Reserve is overseeing these reviews, while the servicing banks hire independent consultants to conduct the review. The review will be focusing on whether errors, misrepresentations, or other deficiencies occurred during the foreclosure process causing financial injury to home owners. Results of anyone’s review will likely take a long time because you can imagine the number of cases that need to be reviewed and homeowners will only receive money as opposed to their home back.
State Settlement with Banks
Information on this can be found at http://www.nationalmortgagesettlement.com/
This program was recently passed and entered into by 49 state attorney general’s (Oklahoma did not enter into this agreement) and the federal government. It sets aside approximately $25 billion in relief to distressed borrowers. The difference with this program is that it primarily assists homeowners who are still in their homes but struggling to make payments on a house significantly underwater.
Specifics of Settlement
- For homeowners who are seeking a loan modification for first and second mortgages, the servicers involved are required to work off up to $17 billion in principle reduction
- Services must provide up to $3 billion in refinancing relief nationwide to homeowners who are underwater.
- $1.5 million will be distributed nationwide to homeowners who lost their Electronic Cigarette homes to foreclosure without giving up right to private claims.
Over the next 6 to 9 months, eligible homeowners will be notified via letters and the full settlement shall be executed for the next 3 years.
The problem with both these programs is that they all come too late. What happens to the millions of individuals who have already lost their homes? The only thing these individuals will receive from both programs is money. Money is hardly sufficient to compensate a person who lost their life savings or life long memories when their home was improperly foreclosed.
One avenue that could be pursued is this: if a homeowners participates in either program and the result is that an improper foreclosure occurred, then that homeowner should be able to use that in a civil lawsuit against the bank for improper foreclosure. If successful in an action for improper foreclosure and the home has not been purchased by a third party bona fide purchaser, then the foreclosure can be reversed and the home returned. It will be interesting to see how the courts will treat such lawsuits.
Perhaps something that will provide better relief for homeowners is the position taken by Move On and the New Bottom Line that advocate a criminal investigation should be commenced and force a larger settlement for homeowners.
This Blog was written by Seneca Law Group Of Counsel Bankruptcy and Property lawyer Fanny Cherng. Its contents are her sole possession. This Blog is intended for informational purposes and social commentary only. It is not meant to be a legal authority. The laws constantly change and each persons circumstances are different. If you have property law or debt questions or need an attorney please contact Seneca Law Group today at (619 630-8529 or e-mail us at [email protected]