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.