Millions of borrowers who could have their foreclosure cases checked for errors
â€“ and possibly get restitution â€“ are passing up the chance.
banking regulators announced Wednesday that theyâ€™ll extend an April 30 deadline
for consumers to request such reviews to July 31.
Only 89,000 people have
asked for reviews even though more than 4 million got letters from the
government late last year telling them that they could, says Bryan Hubbard, a
spokesman for the Office of the Comptroller of the Currency.
groups say promotion was flawed by letters that were too legalistic and
text-heavy advertisements that werenâ€™t eye-catching.
â€œTheyâ€™ve done a
pretty lousy job on public outreach,â€ says Ira Rheingold, director of the
National Association of Consumer Advocates.
The reviews are part of last
yearâ€™s federal settlement with 14 mortgage servicers and affiliates who manage
home loans. Theyâ€™re separate from the $25 billion settlement that states and the
federal government reached last week with some of the same
Borrowers hurt by foreclosure abuses could receive help under
Under the first, auditors hired by the servicers but
approved by regulators will review cases. The consumer letters included a
13-question form asking people to describe how the foreclosure process
financially harmed them.
The letters â€œlooked like what youâ€™d get from a
loan scamming company. A lot of them probably got tossed,â€ says Deborah
Goldberg, of the National Fair Housing Alliance.
The OCC, overseeing the
settlement with the Federal Reserve, has not estimated how much the settlement
will cost servicers. In addition to examining the cases of borrowers who ask for
reviews, auditors are sample-checking 100,000 other foreclosure cases, Hubbard
The settlement covers people who were harmed in foreclosures in
2009 and 2010, if their servicer is part of the settlement. More information is
the $25 billion settlement, $1.5 billion will go to up to 750,000 consumers â€“
payouts could be about $2,000 depending on borrower response. Payouts wonâ€™t
require loan reviews.
A settlement administrator will send claim forms.
The process is expected to take months. See nationalmortgagesettlement.com