An estimated 4.5 million foreclosure cases are set to be reviewed involving both current and former homeowners, with banks set to pay compensation to anyone who is found to have been wronged.
Eligibility for the foreclosure reviews – which will be executed as part of a new mandate federal regulators have to the country’s banks – will be limited to those homeowners whose homes were in foreclosure from 2009 until 2010 only. The reviews will look into abnormalities such as mortgage payment miscalculations by the banks, or banks charging inappropriate fees as penalties, and if anything like this is found then homeowners may well be compensated for the mistakes.
However, it’s unlikely that any of the foreclosure reviews will lead to foreclosures being overturned, says the Wall Street Journal.
“This is going to be a massive undertaking, at a huge expense to banks,” said Tim Rood of the Collingwood Group.
The third-party reviews are set to be announced by a new public outreach campaign beginning in the next few weeks, which will be contactable via email, direct mail and a toll-free phone number. According to the Wall Street Journal, it will be up to individual homeowners to request that their foreclosure case is reviewed.
The reviews were ordered by federal regulators as part of their response to last year’s “robo-signing” scandal, which saw huge numbers of foreclosures being signed off without anyone reviewing them, something that led judges to call into question the foreclosure practices of banks.