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Foreclosure review process has few takers

Potentially weak follow-up advertising on the foreclosure review process and wariness among consumers over mortgage and foreclosure scams are two reasons some consumer advocates are citing as why few consumers have sought review of their foreclosure under a financial industry and government agreement. Officials say only about 4 percent of eligible consumers have applied for foreclosure review under the program. Those eligible for a foreclosure review were supposed to receive a letter in the mail notifying them of the deal.

Fourteen of the nation's largest home mortgage servicing companies reportedly mailed out notices to 4.1 million people who may be eligible for foreclosure relief if a review of the procedures used against the consumers show errors. This blog previously reported that the foreclosure review process would be made available to many homeowners who were somewhere in the foreclosure process in 2009 or 2010.

The mortgage servicing companies agreed to the foreclosure review process in a deal with federal regulators. The foreclosure review agreement was separate from the $25 billion foreclosure settlement that state and federal officials reached with financial institutions earlier this year that followed the home mortgage foreclosure crisis.

The program allows qualifying consumers to have their foreclosure process reviewed. The reviews are conducted by consultants who have been hired by the major loan servicing companies, and the reviews are monitored by federal regulators. If errors are found in the foreclosure review process, the consumer may receive restitution, which commentators say could run from several hundred dollars to more than $100,000 in individual cases.

Officials have announced that only about 165,000 people have taken up the offer to have their foreclosure reviewed under the settlement program. That is a small percentage of the 4.1 million consumers across the country who reportedly received a letter notifying them of eligibility and how to apply.

The loan servicing companies will be making a second mailing to roughly 4 million consumers in early June. The deadline to apply for a foreclosure review for eligible consumers is July 31.

To qualify for a review, a consumer must have been in foreclosure in 2009 or 2010, the mortgage must have secured a loan on a primary residence and the loan must have been processed by one of the 14 loan servicers or their affiliates. Bank of America, JPMorgan Chase, Citibank and Wells Fargo are among the major institutions in the foreclosure review process.

A website has been set up at independentforeclosurereview.com to provide information on the foreclosure review program.

Source: USA Today, "Many eligible borrowers passing up foreclosure reviews," Julie Schmit, May 20, 2012

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