The Independent Foreclosure Review (IFR) was supposed to have helped homeowners. As each day goes by, there’s more evidence the IFR, one of the costliest audit projects in history, was a nothing but a botched effort. The IFR was doomed from the start.
In 2011, the Office of the Comptroller of the Currency ordered some of the major banks to review their foreclosures and compensate borrowers where they found mistakes. The agreement was separate from the $25 billion National Mortgage Settlement in 2012. This review was to be the first time borrowers would have an independent review of their foreclosures.
In November 2011, eligible borrowers began receiving a Request for Review form by mail. If a borrower had previously filed a complaint with one of the participating servicers/lenders, the borrower would also have gotten a Request for Review form.
Some banks involved had audit teams (reviewers) who were ill-trained and made numerous mistakes. When the teams did find bank errors, some were told not to report the errors if they wanted to keep their jobs. Reviewers were also told to ‘change their answers’ and to ‘stop digging’.
Bank of America hired a consulting firm, Promontory Financial for the review. These reviewers were Bank of America contractors reviewing Bank of America loans at a Bank of America facility under the management of full-time Bank of America employees. Bank of America reported those results to the ‘independent’ Promontory Financial who based their reviews on what Bank of America gave them. Promontory reviewers were also given gift cards as much as $500 if they increased the speed at which they reviewed files. In other words – the more files they sped through the greater the amount of the gift card.
Late last year, the OCC was working on a new multimillion-dollar settlement that clearly sent the message the OCC was covering up the botched Independent Foreclosure Review.
The OCC then said the IFR process was too slow and wasn’t showing much proof borrowers were harmed. The OCC’s new $9.3 billion settlement doesn’t set maximums or minimums for the types of aid banks should provide to the borrowers. Banks aren’t required to reduce any principal. In the end, this new settlement moves further away from compensating borrowers. Identifying mistakes banks may have made is even further down the road. Is it no wonder the banks dumped the IFR for the new settlement?
In January 2013, most of the bank regulators, including Bank of America, stopped the IFR program in favor of the new settlement. The reviewers were abruptly told to go home. Many homeowners hoping for some kind of settlement after filling out the forms and repeatedly calling to find out what and when they would receive compensation, were simply told the program was shut down.
Some IFR reviewers said they found some kind of wrongful fee in every file they looked at. Other reviewers said 30% to 40% of the loan files they looked at had numerous mistakes that violated state statutes. Outside consultants showed error ratios of 21% for Wells Fargo and 16% for Bank of America. Wells Fargo files in Orange, California reportedly had error rates as high as 45% to 80% in late 2012. PNC posted rates above 20%.
Critics say the Office of the Comptroller of the Currency (OCC) should have had a uniform and a “real” independent review process set in place beforehand. The Independent Foreclosure Review only adds to the long list of failures for the OCC.
Bank regulators, under this new settlement haven’t been given definite answers as to how much relief they’ll give to borrowers or which borrowers will get the relief. The OCC’s original promises of “appropriate compensation to borrowers who suffered financial harm” now seem very distant. Borrowers who are deemed compensation should be contacted by the end of this month.
Under the new settlement are these lenders; Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. The Independent Foreclosure Review process continues for Ally, Everbank and OneWest.
One year and billions of dollars wasted and homeowners got the short end of the stick.
Keith A. Gantenbein, Jr. is a Colorado a consumer advocate attorney, foreclosure defense and real estate attorney located in Denver and servicing all of Colorado. His foreclosure defense practice includes foreclosure prevention, foreclosure assistance, loan modifications, short sales, and all other foreclosure defense legal assistance. He also handles bankruptcies, mortgage negotiations, lender liability, real estate, civil litigation, debt defense, debt harassment, contracts and landlord/tenant. If you think you will be facing debt collection, foreclosure, or are in the foreclosure process, or have had a wrongful foreclosure, contact Keith Gantenbein at (303) 618-2122 for a one-hour consultation where he will discuss your situation and go over all your options with you.