Is the “Independent Foreclosure Review” a real help to borrowers, or the latest program announced by the feds in a long series of faux efforts to make it appear the government is responding to the misinformation (we used to call them lies in grade school) and forgeries committed by servicers in their handling of foreclosures across the country? You decide.
HAMP was predicted by all but the administration to be a total failure and it did not even meet those expectations. HARP was equally worthless. The latest change to HARP announced by Obama was just more lip stick on that pig. (Nice story summarizing them both here.) For all these programs borrowers have no rights and the servicers operate in a black box. These programs of course were written by the financial services industry in lieu of giving borrowers anything meaningful like the cramdown right in Chapter 13s. While the 50 state attorneys general still debate remedies, the feds swooped in with the consent orders with the familiar refrain — servicers promise to follow the law and continue to operate in a black box. Borrowers have no rights, again. It was not just me complaining — about everyone that was not bought off by the industry has a problem with the feds’ consent orders. Story here.
Now the feds announce the new “Independent Foreclosure Review”. The amount of detail in the program reminds me of the one page bailout bill the last administration tried to get Congress to approve. (It might be two pages depending, copy here.) But we can garner a few opinions from what little is there. See FAQ here. First, it does not apply to anyone having trouble now or in the last year. Seriously. It is for people that either got foreclosed on and evicted over a year ago (like they still have all their proof and haven’t moved on with their lives), or it is for people that worked it all out with the servicer already but they are still hacked off and willing to mess with the servicer afterwards. This time period requirement alone is beyond troubling. The feds would hate it if they got in the way of servicers trying to actually foreclose wrongfully.
I could go on about borrowers have no rights (again), and that the review is another black box for which there is no appeal, no rules, no guidelines (the lack of rights for borrowers is consistent with all the other government programs announced in the last three years) — here is my number one concern with this program at present — and its title is the tipoff.
If you have to put “Independent” in the title, then it probably isn’t.
So I called the Independent Foreclosure Review hotline (1-888-952-9105) and spoke to Tryka at ext. 7131. I think she picked up on the first ring after pressing #3. Amazing start. Tryka wanted my full name but only gives out her first name. She works for a company called Rust Consulting who is a “third party” she said, and who set up the website as well (http://independentforeclosurereview.com/). Link to Whois here. I asked who the independent reviewers would be. She didn’t know, but they would be “approved” by the feds. She listed the names of the federal agencies thinking that might impress me. It only frightened me more (OCC, Federal Reserve, OTS — the usual suspects that consider financial institutions as their customers and borrowers as necessary evils). Funny the CFPB was not in the list. Who is paying the reviewers? Yeah, she doesn’t know that either.
How can you say these are independent reviews if you don’t know who the reviewers are, who initially selects them, and who pays them?
But in the spirit of Fox News, let me be balanced here. I do like that the definition of foreclosure that triggers a review is fairly broad enough to cover many situations:
- The property was sold due to a foreclosure judgment.
- The mortgage loan was referred into the foreclosure process but was removed from the process because payments were brought up-to-date or the borrower entered a payment plan or modification program.
- The mortgage loan was referred into the foreclosure process, but the home was sold or the borrower participated in a short sale or chose a deed-in-lieu or other program to avoid foreclosure.
- The mortgage loan was referred into the foreclosure process and remains delinquent but the foreclosure sale has not yet taken place.
And I also like some of the examples given that may have led to financial injury:
- The mortgage balance amount at the time of the foreclosure action was more than you actually owed.
- You were doing everything the modification agreement required, but the foreclosure sale still happened.
- The foreclosure action occurred while you were protected by bankruptcy.
- You requested assistance/modification, submitted complete documents on time, and were waiting for a decision when the foreclosure sale occurred.
- Fees charged or mortgage payments were inaccurately calculated, processed, or applied.
- The foreclosure action occurred on a mortgage that was obtained before active duty military service began and while on active duty, or within 9 months after the active duty ended and the servicemember did not waive his/her rights under the Servicemembers Civil Relief Act.
But given the holes already mentioned, and the consistent protection of the financial services industry to date — it smells to me like yet another smoke and mirror job. But we won’t know for sure until borrowers apply. There are no details about what will be done should the independent reviewer find a problem but who knows if they ever will. But if you want to apply for a review anyway, either call them and get the official application mailed to you, or fill out this unofficial version here.