Florida Foreclosure Victims May Catch a Break: Feds Order Banks to Reimburse Homeowners

Posted By on April 14, 2011

Maybe the worm has turned for victims of Foreclosure Fraud. Today, there’s growing national news coverage that the federal government (e.g., via a joint effort by the Federal Reserve, the Office of Thrift Supervision and Office of the Comptroller of the Currency) is forcing 16 different mortgage lenders (and mortgage servicers) to reimburse money back to homeowners who these banks unfairly forced into foreclosure.

That’s right:  the banks are going to be made to pay money to their former mortgagees, the homeowners who lost their homes in foreclosure proceedings.  How far back?  According to the news reports, foreclosures during 2009 and 2010 are targeted.

Which banks are involved here?

Among the banks listed by the feds are Bank of America, Citibank, JPMorgan Chase and Wells Fargo.  These, of course, are the four biggest banks in the United States so it should come as no surprise that they are on the list.  Others include Ally Financial Inc., Aurora Bank, EverBank, HSBC, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Banks, U.S. Bank, Lender Processing Services and MERS.

How much are these reimbursements?

There is no set amount established here – this is not like the settlement of a class action lawsuit, where all the parties must share pro-rata proceeds.  Instead, the government is requiring that these financial institutions employ an outside, independent third-party auditor to go over their books.  The auditor will report to the lenders (and servicers) bad foreclosures that it finds, and the amount of each “financial injury.”  The institutions will then forward that amount of money to the borrower that suffered that injury.

When does this begin?

Soon.   The banks (and servicers) have 45 days to go out and find the auditor.  No details on how long the auditor has to do its job.  (Although, that auditor will have lots of pressure to do that job fast: lots of fingers will be drumming on lots of tabletops, both those of the lenders anxious on what they have to fork out as well as the homeowners who are anxious for their cash.)

What can you receive?

There’s no limits according to the federal government.  No cap on what the banks may have to pay in total.  No cap on what each individual homeowner may receive.  What the homeowner will receive will be determined by the auditor.  No word yet on whether or not the homeowner can negotiate with the auditor on what that amount should be, or how the homeowner can challenge the auditor’s decision.  Filing a lawsuit is always an option, of course.

Comments

3 Responses to “Florida Foreclosure Victims May Catch a Break: Feds Order Banks to Reimburse Homeowners”

  1. J Garcia says:

    Finally, I truly hope there is a little justice for some of us who in fact have lost our home. I was very proud of being a homeowner and after 10 years of home ownership I lost my home. I had financial hardship and was late during my last year. My attempts to resolve this issue with Ocwen Loan Services who represented HSBC turned into a disaster, while negotiating a remodification and dealing with None other than India My payments were lost in the Mail supposedly. But yet one out of two payments would be credited when they were both mailed in the same Priority envelope. Hmmmm.
    Meanwhile, the bank who was not willing to negotiate sold my home for a fraction of what I owed but were not willing to rent the property to me so that the youngest of my two boys could at least finish his school years in a home he grew up in ! I dont expect hand outs but it would have felt that my efforts to provide for my family did not go invane. Thanks for posting this information.

    Sad Former Home Owner

  2. Sad Former Home Owner #2 says:

    I understand exactly what Sad Former Homer Owner is talking about. We had a mortgage with Bank of America. We tried loan modification-which we were denied, approved and denied again. We called to see why we were denied and no one could tell us anything, but if we sent in payments they would be returned to us. They suggested a short sale. They suggested a not so good agent. The agent sent the papers-contract for $50K which would have left only $20K on the loan. After weeks, the agent called and they stated they did not show any paperwork. She sent everything again and after weeks of waiting again they denied the offer. We were trying to do a loan modification with a company in Texas when we got a business card from a realtor with a note on the back to call her because our house had been sold/foreclosed on. We tried everything!!! We had lived in this house for 12 years and wanted to get things straight. Now we rent the worst of houses in our city because of our credit status. Yes, this is bad but the worst when kids are involved and we had two sons to witness the worst of hardship. Will we see funds for the loan modification issue, short sale issue and the lack of notice issue??? Time will tell it all-exactly how truthful will Bank of America be with us and others??????

    Sad Former Home Owner #2

  3. Hi Sad Former Home Owner #2,
    So sorry to hear of your horrors and it’s sad to say that yours is not the first story nor the last one of its kind for Florida home owners dealing with Big Banks. It’s just tragic what has happened in our state and across the country to the American Dream of Homeownership.
    Thank you so much for sharing and taking the time to write.
    Best,
    Larry

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