Federal regulators are aiming to give disgruntled homeowners their “day in court” says a recent Los Angeles Times piece.
Under a new process spearheaded by the US Office of the Comptroller of the Currency, borrowers who think they’ve been unjustly harmed by errors, misrepresentations or other deficiencies in the foreclosure process can have their cases reviewed.
All borrowers whose residence was in any stage of the foreclosure process between January 2009 and December 2010 will be eligible to have their cases reviewed by an independent consultant.
And the process doesn’t exclude borrowers who fell into foreclosure and managed to find their way out. “We are looking not just at those foreclosures that resulted in foreclosure sales, but at foreclosures that were pending at any point,” acting Comptroller John Walsh said in the article.
The process is intended to fix what is wrong in the loan servicing arena. That includes the issue of “robo-signing” in which employees, and sometimes machines, sign off on foreclosure documents they haven’t read or verified as accurate.
Walsh vowed that every borrower with a complaint will be heard. It could take several months to conclude each review, he said, but anyone who requests a review will get one.
“While I wish there was a faster way to address the problems,” he said, “the fact is that this process will take some time to complete.”
If the auditor identifies instances of financial injury or harm, the lender will be required to develop a remediation plan and make any appropriate refund. While borrowers may not be able to get their house back if it has been repossessed, they could be eligible for a monetary settlement. And the payout could be substantial.
Is there a role for agents in all this? After all, agents are the first real estate industry professionals prospective homeowners have contact with. Shouldn’t NAR be working to help regulators educate agents on how to help homeowners avoid foreclosure altogether?
We would love to know what you think.