Washington, D.C. -Too many people, including lawmakers on Capitol Hill, think the independent foreclosure review was a complete failure which mostly benefited the consultants. Some of these lawmakers have repeatedly requested transparency on how the reviews were conducted, and now they will get the will finally get some of the documents they have been requesting.
During a Senate Banking Committee hearing on Thursday, Fed Chairman Ben Bernanke told Sen. Elizabeth Warren that regulators are currently working on a report which will bring more transparency to the review process, the Housing Wire reported.
Sen. Warren (D.-MA) has been trying for months to get information on how the reviews were conducted and wanted details of what consultants found during the review process. She began asking for review documents back in February.
The Federal Reserve and the Office of the Comptroller of Currency halted the Independent Foreclosure Review earlier this year after realizing that it was becoming too costly and taking too long. Although many of the consultants were inexperienced and did not fully understand the foreclosure documents they were reviewing, they were paid over a billion dollars.
When the program was concluded, Sen. Warren and fellow colleagues Senator Elijah Cummings (D.-MD) and Representative Maxine Waters (D. – CA) were outraged stating that wronged homeowners would be shortchanged. They argued that the $9.6 billion dollar settlement reached with 13 lenders to end the review process would not be enough to adequately compensate the 500,000 people who applied for a mortgage review.
Their suspicions were true, of the $9.6 billion only $3.6 billion has been distributed to homeowners and the sums they are receiving are far less than they expected. For instance, wronged homeowners who applied for mortgage modification but whose applications were delayed or denied by banks even though they were qualified only received a few hundred dollars in compensation.
Bernanke told Sen. Warren the report would only include details about the 500,000 who applied for review. Thousands of suspicious mortgages were not part of the review so the scope of the bank’s misconduct throughout the mortgage crisis may never become clear.
Sen. Warren also pressed Bernanke on how homeowners could be informed about the settlement they received when there is no information available, Housing Wire reported.
Bernanke said, “We stopped the investigation before all borrowers were analyzed.” He added, “We do have that information for some folks, we are looking to see if we can get that information to those individuals whose files were evaluated by the individual consultants.”
Bernanke did not state when the IFR report would be made available, and even when it is it probably won’t give an accurate account of the bank’s abusive practices. There are thousands of homeowners, who were wrongfully foreclosed upon, but didn’t apply for the review process.
Banks are accused of a wide range of unethical practices from foreclosing on military members’ homes while they were deployed overseas, seizing homes even though the homeowner had not defaulted on their mortgage loans, and denying thousands of qualified homeowners mortgage modifications.
Throughout the crisis, many homeowners gave up and may have lost their homes unnecessarily. It pays to hire a foreclosure attorney to evaluate mortgage documents, should they detect any inconsistencies or wrongful bank practices they can keep you from losing your home.