More
than a year ago, regulators uncovered numerous foreclosure errors from lenders’
processing paperwork on foreclosures against home owners. Mistakes ranged from
errors on loan modifications to wrongful foreclosures.
The
Office of the Comptroller of the Currency and the Federal Reserve released
Thursday how much compensation affected home owners will receive.
However,
the regulators caution that the majority of eligible home owners may not see any
money. More than 4 million borrowers received letters from banks saying they
were eligible for a review of their foreclosure cases by independent
consultants. However, only 340,000 cases have been reviewed as of May 31.
Regulators have extended the deadline so that more affected home owners can take
advantage. The deadline is now Sept. 30. (Originally it was July 31.)
The
following is a list from the agencies of possible compensation home owners may
see from their foreclosure reviews:
▪
Home owners who wound up in foreclosure after errors during or after a trial
loan modification
Possible
compensation: They’ll receive the value of their home's equity at the time of
foreclosure, plus $125,000. If they were able to get their home back prior to
foreclosure, they'll receive $15,000.
▪
Military members who lost their homes to foreclosure while still on active
duty
Possible
compensation: The value of their home's equity at the time of foreclosure, plus
$125,000. If they had negative equity in their home, they’ll still receive
$125,000.
▪
Home owners who landed in foreclosure even though they were not in default
Possible
compensation: They’ll receive $15,000 if they were able to get their homes back.
If they lost their homes, they’ll receive $125,000 plus any equity from their
homes.
▪
Home owners who experienced any errors or problems with loan modifications (such
as being denied a loan modification by a lender or a lender acting too slow in
processing an application)
Possible
compensation: They may receive up to $15,000, plus any home equity.
Any
other errors or abuses uncovered in the reviews, such as banks using the wrong
interest rates on approving applications, will be determined on a case-by-case
basis for possible compensation, the agencies said.
Source: “U.S. Sets Rules for Foreclosure
Compensation,” The Wall Street Journal (June 21, 2012) and “Homeowners to
Receive up to $125,000 for Foreclosure Abuses,” CNNMoney (June 21, 2012)