Big Foreclosure Compensation, But Only for the Right Wrongs
by Paul Kiel, ProPublica Answers to homeowners' questions about the Independent Foreclosure Review.The administration's website for the foreclosure prevention program. Provides an FAQ, homeowner examples, and other tools to see whether you might qualify for the program.A list of HUD-approved housing counseling agencies nationwide.Tips for homeowners from the Federal Trade Commission.These rules lay out how mortgage servicers are supposed to conduct the program.A finance and economics blog that provides news and metrics on the state of the housing market.
Can you put a price on the damage caused by a wrongful foreclosure? Banking regulators have. And it's $125,000. Or $60,000. Or $15,000. Or2026 it's unclear.
Last November, banking regulators launched a process to force the big banks to compensate homeowners victimized by their foreclosure abuses. Many crucial details remained unclear, including how much victims might receive.
More than seven months later, regulators finally released a "framework" that shows some of the possible outcomes. It's a list of thirteen mortgage servicing "errors," each with its own associated form of compensation. In addition to fixing the bank's errors, remedies include cash payments ranging from $500 all the way up to $125,000.
It turns out that, for homeowners seeking compensation for those errors and abuses, it's crucially important just how the servicer messed up. The logic for the differences in payment isn't always apparent and in some instances seems to defy common sense.
Two homeowners who each had their bid for a modification mishandled, for instance, could emerge with either $125,000 or $15,000 depending on just where in the process the error occurred. Regulators also left unsettled how homeowners will be compensated for so-called robo-signing, the scandal that provoked the foreclosure review to begin with.
With consumer response to the review so far underwhelming, regulators also extended the deadline for homeowners to submit a claim to September 30. It was originally April 30.