US officials have launched an independent review process in which individuals can challenge foreclosures carried out by 14 major lenders in the wake of the 2008 financial crisis.
Independent consultants would assess if borrowers lost out financially “through errors, misrepresentations or other deficiencies in foreclosure practices,” the Office of the Comptroller of the Currency said Tuesday.
Where that is the case, the consultants would determine what compensation should be paid.
The action covers foreclosures in 2009 and 2010 and requires lenders to send out letters to borrowers explaining how they can have their cases reviewed.
Authorities have also set up a website at www.IndependentForeclosureReview.com.
The Federal Reserve issued so-called “consent orders” in April against the 14 lenders — including Bank of America, HSBC, JPMorgan Chase and Wells Fargo — calling for better monitoring, standards and documentation.
The banks were told “to address a pattern of misconduct and negligence” related to foreclosure processing.
The scandal began with evidence that staff had signed documents pushing foreclosures forward without proper vetting, a practice that became known as “robo-signing.”
The 2008 collapse was largely caused by the popping of the US housing bubble, which saw home prices plunge along with the value of controversial mortgage-backed securities, sending shockwaves through the financial sector.
Earlier Tuesday, the Fed announced that customers of four major lenders — GM’s mortgage arm GMAC, HSBC, SunTrust and EMC — could seek compensation if their homes were unfairly repossessed in 2009 and 2010.
“Borrowers who believe they were financially harmed during the mortgage foreclosure process by four institutions in 2009 and 2010 can now request an independent review and potentially receive compensation.”
“Servicers are required to compensate borrowers for financial injury resulting from deficiencies in their foreclosure processes.”