Independent Foreclosure Review Junked in Advance of Watchdog Report

It was supposed to be a redemption for struggling homeowners and those who had already lost their homes: An independent foreclosure review. booksandpages.jpg

Now, it’s likely to be tossed in favor of a $10 billion foreclosure abuse settlement among federal officials and 14 banks (including the major players involved in the earlier $26 billion settlement last year). A deal is expected to be inked within days.

Miami foreclosure lawyers know the initial plan from the Office of the Comptroller of the Currency was this: Banks would pay consultants to come in and review each individual foreclosure case in which the homeowner had applied for relief, to determine whether bank foreclosure abuses or mistakes had occurred. Most commonly, these would be problems with faulty or forged documentation or records.

However, in the last several months, the program began to come under fire. For one thing, the consultants were being paid hefty hourly sums by the banks. The problem with this was two-fold: These consultants had an interest in slowing cases down, as well as in deciding in favor of the banks.

Additionally, it was leaked to the press that at least one bank had provided consultants with computerized questionnaires in which the default answers favored the banks. Consultants had to manually change the answers if they disagreed.

We also know that former Bank of America employees have come forward to report that some of their duties involved researching certain cases for consultants and then making a recommendation to them. Meanwhile, homeowners were not apprised of their case or given the opportunity to make their own recommendation.

So in other words, the whole “independent” aspect of the program was in serious question. It’s not necessarily a bad thing that it’s been scrapped.

However, we understand that the timing is highly suspicious. Rep. Brad Miller, a Democrat from North Carolina, has gone to the press saying that the Government Accountability Office had been conducting an investigation into the independent foreclosure reviews. The report hadn’t been released yet – but the Office of the Comptroller of the Currency knew it was about to be, and also knew it was reportedly going to show the effort in a very bad light.

Among the findings by the GAO was that of a sampling of bank loan files, there was a sky-high error rate of 11 percent. While about 4 million families have so far lost their homes to a foreclosure in the wake of the housing bubble burst, roughly 400,000 of those cases are believed to have critical, bank-caused flaws.

(What this means for you is that having an experienced foreclosure attorney is critical. You stand to have your entire foreclosure case dismissed if the bank is found to have lacking or forged documentation.)

So for the $10 billion settlement to be revealed just days before the report was to become public – it certainly raises some eyebrows.

What we don’t know is what will happen to the approximately 250,000 homeowners who have already applied for relief through the independent review process. Certainly, one of their first moves should be to contact an experienced foreclosure defense attorney as soon as possible.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

Additional Resources:
Foreclosure Review Scrapped On Eve Of Critical Watchdog Report, Congressman Says, Dec. 31, 2012, By Ben Hallman, The Huffington Post
More Blog Entries:
“Independent” Foreclosure Reviews a Boon for Bank Consultants, Nov. 9, 2012, Miami Foreclosure Lawyer Blog