Federal Regulators Outline Rules for Foreclosure Compensation
Washington 6/24/2012 03:54 PM GMT (WooEB)
Some foreclosed homeowners could be eligible for $125,000 in compensation if they were subjected to processing errors by mortgage servicers under new rules detailed by federal regulators.
After a year of investigations into the bank’s widespread mishandling of foreclosures, federal regulators outlined a plan to compensate wronged homeowners. The errors include wrongfully foreclosing on member of the military, mistakes on mortgage modifications, initiating foreclosure on homeowner who was not in default, and rejecting loan assistance out of error.
Regulators also set up a schedule of the financial awards a homeowner may be eligible for. Those who lost their homes without defaulting on their loans could get as much as $125,000. The same would apply for banks that wrongfully foreclosed on a member of the military or someone enrolled in a loan modification program.
Mortgage servicers have been accused of many abuses, some of these homeowners caught mistakes and challenge their loan servicers with the assistance of a foreclosure attorney, but close to 4.4 million homeowners are eligible for compensation. Thus far, only 194,000 have applied for foreclosure review.
Other violations that warrant compensation pertain to loan modifications. Homeowners who were eligible for loan modifications but were denied are eligible for up to $15,000. Mortgage modifications allow people to stay in their homes by reducing their monthly loan payments. This is generally the first step to avoiding foreclosure and can be facilitated by a foreclosure lawyer.
The foreclosure compensation program is separate for the $25 billion settlement the banks reached with the federal government. Homeowners who believe there are eligible for review will have to provide proof that they were subjected to these wrongful practices, this can be quite a burden, but a foreclosure attorney can make this an easier endeavor.
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