More than 4 million borrowers who faced foreclosure between January 1, 2009 and December 31, 2010 may have a chance to have their foreclosure reviewed by an independent body.
The reviews stem from a deal forged earlier this year in which 14 servicers agreed to hire independent consultants to evaluate whether borrowers suffered financial injury during the foreclosure process. If a review finds errors or abuses by the financial firms, the consultants will determine what recompense wronged homeowners deserve.
Financial injury could include unwarranted or miscalculated fees, a foreclosure that took place after a homeowner filed bankruptcy or a foreclosure that took place while a debtor was waiting on approval for a home mortgage modification. Looking at all of those factors and the housing industry mess of the past three years, it wouldn’t be presumptive to say that the mortgage industry could face millions of financial injury claims. Many debtors have complained about foreclosures taking place after they have filed bankruptcy and even more have complained about foreclosures happening even as they applied for a mortgage loan modification.
A matter of fact, it was the mortgage modification process that caused many homeowners to throw up their hands and seek bankruptcy protection. Because the mortgage servicer industry had so little incentive to keep homeowners in their home, it was as if they preferred foreclosure to a modification if they had a choice. Now all of the mortgage industry’s missteps and carelessness has catch up with them. It won’t be surprising if many mortgage companies liquidate in bankruptcy to avoid the onslaught of problems that may arise from these foreclosure reviews.