Housing advocates are urging federal banking regulators to extend a special foreclosure review program that is set to stop accepting new applicants Dec. 31. But it appears the Federal Reserve Board and the Office of the Comptroller of the Currency have no intention of extending the deadline.
A Federal Reserve Board spokeswoman said the board had “no comment at this time.”
The Opportunity Agenda and The Greenlining Institute claim regulators and banks have done a “poor job” of trying to reach millions of borrowers about the opportunity to be compensated for errors and mistakes servicers made during the foreclosure process.
Regulators have extended their “Independent Foreclosure Review” program several times because of the low response rate. As of Dec, 6, they have received at least 329,000 requests for foreclosure reviews, according to OCC spokesman Bryan Hubbard.
In addition, loan file sampling by consultants hired by the 14 servicing banks have identified 159,000 loans with foreclosure processing issues. The work by the consultants will continue into next year and will be expanded to identify all loan files with similar foreclosure processing issues.
Those file reviews “will expand significantly,” Hubbard told NMN.
Regulators initiated the foreclosure review program 18 months ago as a result of their investigations into the robo-signing scandal. But the program got off to a slow start due to a poor outreach effort, according to Greenlining Institute Community Reinvestment Act director Preeti Vissa.
The regulators now have a “much more robust” outreach effort. “But with the Dec. 31 deadline approaching, it is a case of too little, too late,” she told reporters.
After the reviews are completed and it is determined a servicer’s actions financially harmed individuals, they can receive compensation ranging from $500 to $125,000. The servicer also has to correct their credit report.
In cases where the borrower is in foreclosure process, the servicer has to suspend the foreclosure.