More than six months ago government regulators and banks first extended offers to 4.3 million homeowners facing foreclosure: to review, at no cost, the foreclosure process to check for any possible errors or misrepresentations. Homeowners can stand to collect compensation of as much as $100,000 through this process if errors are found. But thus far, only a tiny percentage of those eligible have actually signed up, only 165,000 people â€” fewer than 4 percent of those eligible â€” have applied. The original April 30 deadline has since been extended to July 31.
The push for a review process was set in motion by the “robo-signing” scandal, in 2010 when several banks admitted mishandling some foreclosure documents. Some borrowers may have wrongfully lost their homes as a result, and the scandal exposed systemic problems in the foreclosure process.
In the wake of the scandal, federal bank regulators required 14 mortgage companies to establish the Independent Foreclosure Review process.
Some homeowners’ cases may be reviewed, even if they don’t apply. A sampling of foreclosure cases are being pulled from the banks’ records to be scanned for mistakes.
Restitution payments will range from several hundred dollars to more than $100,000 for the gravest errors. The funds are separate from the $25 billion national bank settlement announced earlier this year.