SUBMITTED BY DCB
Wrongful Foreclosure Compensation Claim Program
The following is not intended as legal advice, it is a speculative preliminary/tentative assessment based on sparse information. It suggests that the PRESS and defense bar needs to move quickly to alert victims of foreclosure of possible rights –and file protective claims. There is much analysis needed to grasp all the ramifications. OCC is not cooperating at this point and refuses to provide even copies of the form for analysis. This refusal in itself should provide a basis for demanded extension of the filing time period. Is this another HAMP-like setup?
The U.S. Office of Comptroller of Currency (“OCC”) announced on November 1, 2011 that it has reached a Consent Agreement with the below-listed mortgage loan servicers—some of which are well-known large banks and investment banks–referred to as, “Independent Foreclosure Review” which allows foreclosure victims to make a “Request for Review”. You’ve got until April 30th, 2012 to file your Request for Review with the OCC. See FAQ about the new review process posted on OCC website.
Other consenting servicers are not banks but are basically collection agencies that have purchased collection rights from lenders-including purported “securitization trusts” that were used to pool loans and resell interests in the pooled loans to investors such as pension funds. The primary drivers that for the servicers agreeing to the Consent Order were: use of defective documentation to support foreclosure complaints in county courts [e.g. improperly notarized “Assignments of Mortgage”, statements of amounts due], and foreclosure evictions carried out on homeowners who were attempting to work out loan modifications under the Obama HAMP program. The Consent Agreement requires that consenting servicers send letters to their victims and fixes a deadline for making the claims of April 30, 2012. Per the OCC FAQ,
“Borrowers may also visit http://www.IndependentForeclosureReview.com for more information about the review and claim process. Assistance with the form and answers to questions about the process are available at 1-888-952-9105, Monday through Friday from 8 a.m. to 10 p.m. (ET) and Saturday from 8 a.m. to 5 p.m. (ET).
Requests for review must be received by April 30, 2012.”
Unfortunately not all servicers entered into the consent agreement. For those servicers, victimized homeowners either can use the same guidelines as the OCC consent to request compensation voluntarily by the servicers, and file a copy of the same claim information with the Federal Trade Commission and the Ohio Attorney General Consumer Protection Division— or use more complex judicial remedies in county courts—including complaints to set aside the foreclosures and restore ownership in the seized homes by “Quiet Title” actions. Any of these actions can be undertaken by the homeowners themselves individually or in groups, through legal aid, or through attorneys.
It appears that non-consents should be subjected to the same claim processes—through the Federal Trade Commission and state Attorneys general Consumer protection. Implicitly there is denial of equal protection absent a state right growing out of the same facts. Thus if a servicer used LPS/DOCX –MERS contrivances and was regulated by Federal Reserve and OCC, then a victim is afforded rights. But under this consent enforcement program, if an unregulated servicer [the worst kind] used the exact same procedure to abuse homeowners and the judicial system—that homeowner MUST have equal rights –but under a different venue. The claims should now be part of state law as if the consenters—particularly MERS/LPS/DOCX –have effectively confessed their actions and damages remains the only issue.
Justice demands equal treatment: arguably, a state court judge should look to the OCC action and ORDER the servicer to apply the same process, by settlement, as if it had consented where the facts are the same. ALL foreclosures should be re-opened in the state court systems unless claims are filed and accepted by OCC.
Because all of these remedies are new and untried it is impossible to assess the degree of success that any of the claimants or approaches will experience—including the claims with consenting servicers. Already consumer advocates assert that the servicer-hired claim reviewers are likely to be biased and/or poorly trained. Consumer advocates suggest that claims agreed may be arbitrarily low and may require appeals within the framework of the Consent process. In any case, well documented and coherent claims will be be necessary for justice to be done. Per Mandelman, “(A NOTE ABOUT BANKRUPTCY: If you’re in bankruptcy, however, be sure to take the servicer claim to your attorney, DO NOT FILE your “Request for Review” on your own.)”
The consent requires that the victims fall under the following classes:
You have to have been part of a “foreclosure action” on your PRIMARY RESIDENCE between January 1, 2009 and December 31, 2010. What is a “foreclosure action?” It’s one of the following four situations:
1. You lost your home to foreclosure, and its been sold by the trustee.
2. You were in foreclosure, but either because you brought the payments current, entered some sort of payment/forbearance plan, applied for a loan modification, or filed bankruptcy, it was pulled out of foreclosure.
3. You were in foreclosure, but were able to sell the home via short sale, or chose to deed-in-lieu to avoid actually losing home to foreclosure.
4. You’re in foreclosure now and you’re still delinquent, but no foreclosure sale has happened yet.
Below is THE list of the 24 consenting servicers—which is a fraction of the total servicer population but a larger percentage of actual abusive foreclosures.
1. America’s Servicing Co.
2. Aurora Loan Services
3. Bank of America
11. EverBank/EverHome Mortgage Company
12. GMAC Mortgage
15. IndyMac Mortgage Services
16. MetLife Bank
17. National City Mortgage
18. PNC Mortgage
19. Sovereign Bank
20. SunTrust Mortgage
21. U.S. Bank
22. Wachovia Mortgage
23. Washington Mutual (WaMu)
24. Wells Fargo Bank, N.A.
25. De facto MERS
26. De facto LPS/DOCX
Also signing consent orders including damage liabilities to homeowners are commonly used document creators Lenders Processing Services (“LPS”) and its DOCX subsidiary and Mortgage Electronic Services (“MERS”). Damages apparently can be claimed if these were involved—most times they were—especially MERS. The issue is the amount of financial damages—however if a homeowner was victimized by a servicer that is not named –not subject to OCC jurisdiction—nevertheless if the servicer used MERS or LPS/DOCX, then the liability is in effect joint and MERS/LPS seem to be able to be named parties in the claim.
Examples of financial injury…
EXAMPLES OF COMPENSABLE DAMAGES
The OCC FAQ lists “softball” or limited value examples of financial injury as a result of “errors, misrepresentations, or other deficiencies in the foreclosure process,” but they also state clearly that IT IS BY NO MEANS MEANT TO BE A COMPLETE LIST. It’s really more like general guidance or a starter list of examples than anything else. So, in point of fact, there could exist any number of other “errors, misrepresentations, or other deficiencies in the foreclosure process,” that could have caused homeowners to be financially damaged. http://mandelman.ml-implode.com/2011/11/occ%E2%80%99s-independent-foreclosure-review-for-homeowners-is-ready-%E2%80%93-but-so-are-the-scammers/ They ignored robosigning which accelerated fraudulent evictions—probably the largest effect. Also the robo-signing caused many to resist because it was obvious that the documentation was bogus and that the servicer may well have NO RIGHT at all to the homeowner promissory note or the foreclosed property—exposing homeowners to double recoveries. The robo-signing should be assumed generally known because it was exposed on the front page of the New York Times in October 2010—ergo subject of judicial knowledge. And public outrage. LPS/DOCX and MERS signed consents—no proof issues there but for HOW MUCH DAMAGE.
The following is a non-exhaustive list of events that give rise to claims for damages:
• ◦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. If you were foreclosed on while making your trial payments, this one’s for you.
• ◦The foreclosure action occurred while you were protected by bankruptcy.
• ◦You requested a 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 service-member did not waive his/her rights under the Service-members Civil Relief Act.
• improperly notarized “Assignments of Mortgage” or other legal documents that speeded up wrongful eviction creating excessive rental payments and/or attorney fees, or lost/damaged furnishings
• erroneous seizure of the wrong property that resulted in loss of furnishings and the greater of the reduced value of the home or repair costs if you got it back, or the greater of cost or value if you did not get it back plus emotional distress
• more more more
“A few words about financial injury…
Determining how you were damaged or financially injured is not going to be nearly as easy as you might think. It’s not “Common Sense Court,” we’re talking about here… we’re talking about lawyers at the OCC… banking lawyers… the worst kind.
The idea is that damages are supposed to measure in monetary terms, the extent of the harm that a plaintiff (as in, you the homeowner) has suffered because of a defendant’s (as in, your servicer’s) actions, and their purpose is to restore the injured party to the position they were in before the harm happened.
In general, you should think about damages as being restoring what you lost… as opposed to being punitive, because although punitive damages may be awarded in certain situations, this is not one of them. In fact, remember… this isn’t like you’re going to court… you’ll be submitting your Request for Review to the OCC.
There are three basic categories of damages. The first is termed compensatory damages, which are awarded to restore what the plaintiff lost as a result of the defendant’s wrongful conduct. Next, there are nominal damages… a small sum awarded when someone has not suffered any substantial loss, but has been wronged nonetheless. And then there are punitive damages, which are awarded under certain circumstances to punish a defendant for particularly egregious, wrongful conduct.
But, for the purposes of filing your Request for Review with the OCC, you need to think about how your servicer’s acts directly caused you harm… and by harm, I mean financial harm.
Whenever the topic of “damages” comes up, I often hear homeowners mention the idea of mental pain and suffering. Now, there’s no question that this type of suffering is involved here, as it includes fright, nervousness, grief, emotional trauma, anxiety, humiliation, and indignity… and I think it’s safe to say that homeowners in foreclosures have all those things, and probably a few more.
On the Website, Law.com, they talk about as follows:
Evidentiary problems include the fact that such distress is easily feigned or exaggerated, and professional testimony by a therapist or psychiatrist may be required to validate the existence and depth of the distress and place a dollar value upon it.
But, you have to remember, we’re not talking about a court of law here, we’re talking about the OCC, so you need to concentrate primarily on how you were damaged tangibly, like in dollars and sense, which may be hard to do when the home you lost to foreclosure, or may lose to foreclosure, has no equity.
You see, as far as damages for losses to real property goes, it looks to me like they could measure financial injury related to real property by assessing the difference in the fair market value of the property before and after the injury. Not only that, but it also seems that diminished fair market value is not used as the measure of recovery, if the financial injury to real property is temporary in nature.
Now, I have no idea whether any of this makes any difference to the OCC, but I do know this: damages or financial injuries are subject to numerous limitations and legal definitions, so it seems to me that most people are going to need a lawyer to help them figure “financially injury” component out.
I’m not saying that it’s an insurmountable issue, but since the OCC has not provided any real guidance in this area, and since the OCC’s process does not offer any sort of appeals process should you be denied, you probably want to at least consult with an experienced attorney before filing.
Here are links to the various OCC Consent Orders, but check with the OCC if yours isn’t on this list, as it may not have been updated.” Mandelman ibid
◦Consent Order for Aurora Bank, FSB (PDF) http://www.ots.treas.gov/_files/enforcement/97661.pdf
◦Consent Order for Bank of America (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47b.pdf
◦Consent Order for Citibank (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47c.pdf
◦Consent Orders for EverBank and EverBank Financial Corp. (PDF) http://www.ots.treas.gov/_files/enforcement/97664.pdf
◦Consent Order for HSBC Bank (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47d.pdf
◦Consent Order for JPMorgan Chase Bank, N.A. (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47e.pdf
◦Consent Order for LPS; DocX, LLC; and LPD Default Solutions, Inc. (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47f.pdf
◦Consent Order for MetLife Bank, N.A. (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47g.pdf
◦Consent Order for MERSCORP and Mortgage Electronic Registration Systems, Inc. (MERS) (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47h.pdf
◦Consent Orders for OneWest Bank, FSB and IMB HoldCo LLC (PDF) http://www.ots.treas.gov/_files/enforcement/97665.pdf
◦Consent Order for PNC Bank, N.A. (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47i.pdf
◦Consent Order for Sovereign Bank (PDF) http://www.ots.treas.gov/_files/enforcement/97662.pdf
◦Consent Order for U.S. Bank National Association, U.S. Bank National Association ND (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47j.pdf
◦Consent Order for Wells Fargo Bank, N.A. (PDF) http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47k.pdf
Entities involved in the process
Financial Services Roundtable Housing Policy Council http://www.fsround.org/housing/index.html http://www.fsround.org/fsr/pdfs/press_releases/HARPProgram10.24.11.pdf
Hope Now Alliance
John Walsh, the acting Comptroller of the Currency http://www.occ.treas.gov/ http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-91.html
Interagency Review of Foreclosure Policies and Practices, http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47a.pdf
Frequently Asked Questions Regarding the Interagency Foreclosure Enforcement Actions
On April 13, 2010, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Board of Governors of the Federal Reserve System announced enforcement actions against 14 large residential mortgage servicers and two third-party vendors for unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing.
Below are answers to common questions regarding the enforcement actions.
Q. Who can I talk to now about my situation in light of your consent orders?
A. Customers may also visit http://www.IndependentForeclosureReview.com for more information. Assistance with the form and answers to questions about the process are available at 1-888-952-9105, Monday through Friday from 8 a.m. to 10 p.m. (ET) and on Saturday from 8 a.m. to 5 p.m. (ET).
Q. How can I request that my foreclosure be reviewed?
A. Information about the process is being provided in mailings to eligible borrowers that began November 1, 2010. The mailings should be completed by the end of the year. Customers may also visit http://www.IndependentForeclosureReview.com for more information. Assistance with the form and answers to questions about the process are available at 1-888-952-9105, Monday through Friday from 8 a.m. to 10 p.m. (ET) and on Saturday from 8 a.m. to 5 p.m. (ET).
Q. My house will be sold through foreclosure proceedings in the next few weeks. Will your enforcement order prevent that action?
A. The orders are intended to ensure that borrowers are treated fairly, especially those subject to foreclosure, but they are not intended to keep lawful foreclosures from proceeding. The independent consultants and servicers have identified loans that have been scheduled for foreclosure sale. Requests for review from eligible borrowers whose loan is scheduled for foreclosure sale will receive highest priority for review, and the foreclosure sale will be suspended while the review is being performed. If you believe you were improperly foreclosed upon or have been unfairly denied a modification and you are facing imminent foreclosure, you should contact your servicer if you have not done so already; or you can also contact our Customer Assistance Group at helpwithmybank.gov if you wish to file a complaint against a national bank servicer.
Q. I’m still working with my servicer to prevent a foreclosure sale. Will I still be able to work with them?
A.Yes, continue to work with your servicer. Participating in the review will not impact any effort to prevent a foreclosure sale. The review is not intended to replace current active efforts with your servicer.
Q. Do I need an attorney to request or submit the request for review form?
A. No. The independent foreclosure review is free. Beware of anyone who asks you to pay a fee in exchange for a service to complete the Request for Review Form. However, if your mortgage loan meets the initial eligibility criteria and you are currently represented by an attorney with respect to a foreclosure or bankruptcy case regarding your mortgage; please refer to your attorney.
Q. If I request an independent foreclosure review, is there a cost or will there be a negative impact to my credit?
A. The Independent Foreclosure Review is a free program. Beware of anyone who asks you to pay a fee in exchange for a service to complete the Request for Review Form. The review will not have an impact on your credit report or any other options you may pursue related to your foreclosure.
Q. How did the OCC ensure independence of the consultants and law firms hired by the servicers to conduct and support the independent reviews?
A. The OCC and the Federal Reserve Board reviewed consultants and law firms proposed by the servicers, their existing and previous relationships with the servicers and roles in foreclosure issues to prevent conflicts of interests and situations that could result in undue influence over their independent judgment.
Q. What is the OCC’s role in the independent foreclosure review?
A. The OCC and the Federal Reserve Board required corrective action to address unsafe and unsound mortgage servicing and foreclosure processing among 14 large mortgage servicers. The federal regulators’ role is to ensure compliance with those consent orders through oversight and direction. As required by the consent orders, independent consultants will conduct the reviews of foreclosures, and determine whether errors, misrepresentations, or other deficiencies resulted in financial injury. Where a borrower suffered financial injury as a result of such practices, the consent orders require that remediation be provided. The regulators have spent significant amount of time to ensure a integrated claims process is simple, clear and fair and that the reviews are conducted consistently across servicers in an independent manner.
Q. My foreclosure sale was in 2011 but the process began in 2010, am I still eligible to have my foreclosure reviewed?
A. Yes, if the foreclosure activity was in process at any point in 2009 or 2010, if it involved your primary residence, and if the mortgage was serviced by one of the participating servicers.
Q. What mortgage servicers were involved in the independent look back review of foreclosures?
A. Foreclosure activities on a borrower’s primary residence conducted between January 1, 2009 and December 31, 2010 by the following mortgage servicers are eligible for review:
•America’s Servicing Company
•Aurora Loan Services
•Bank of America
•IndyMac Mortgage Services
Q. When will I know the results of the review?
A. Individuals will be sent an acknowledgement letter within one week after the request is received. A review could take several months, because the review process will be a thorough and complete examination of many details and documents. Individuals will be notified in writing of the results of their review.
Q. I filed for bankruptcy. Am I to assume my foreclosure should not have proceeded?
A. Not necessarily, as filing bankruptcy does not prevent foreclosure proceedings in all cases. If you suspect you were improperly foreclosed upon while under protection from U.S. bankruptcy law, you may want to consider requesting a review through the independent review process required by federal regulators’ consent orders. You may also want consult your personal bankruptcy lawyer.
Q. Are your actions against servicers aimed at foreclosure prevention?
A. The orders are intended to ensure that borrowers facing foreclosure are treated fairly, but they are not intended to keep lawful foreclosures from being initiated or proceeding. The enforcement actions, which were announced in April by the OCC, the Office of Thrift Supervision, and the Board of Governors of the Federal Reserve System specifically address mortgage servicing standards for loan modifications. The orders specifically require a single point of contact for borrowers, eliminate dual tracking in cases where a trial or permanent modification has been approved, and require adequate staffing of servicer loss mitigation programs. While not all foreclosures can be prevented, these changes are expected to eliminate confusion and frustration for homeowners trying to save their homes, and ensure that they are treated fairly and afforded every protection available under law
Q. I understand there will also be sample loan files pulled for review as part of a “look-back” by the third-party consultants for each of the servicers under the Consent Orders. What if the sampling method used by the third-party consultants conducting the “look back” misses me?
A. Sampling is only one of the methods that will be employed in the review. You can ask that your case be reviewed as part of the look back process if you think you suffered financial injury as a result of errors, misrepresentations, or other deficiencies in a foreclosure action on your primary residence that occurred in 2009 or 2010. Mailings to eligible borrowers explaining that request process began November 1, 2011 and will be completed by the end of the year. Borrowers may also visit http://www.IndependentForeclosureReview.com for more information. Assistance with the form and answers to questions about the process are available at 1-888-952-9105, Monday through Friday from 8 a.m. to 10 p.m. (ET) and Saturday 8 a.m. to 5 p.m. (ET). Requests must be completed and submitted by April 30, 2012.
Q. I was more than six months delinquent on my mortgage. Can people like me expect remediation?
A. Remediation will be based on documented financial harm stemming from improper foreclosure practices by the servicer. If a foreclosure activity on your primary residence was in process at any point in 2009 or 2010, your mortgage was serviced by one of the participating servicers, and if you believe you have been financially harmed by improper foreclosure practices involving errors, misrepresentations, or other deficiencies, you should consider requesting a review through the third-party review process required by the enforcement actions.
Q. How do you repair my ruined credit?
A. Remediation may include the correction of information reported to credit bureaus. Eligible borrowers who think they have been financially harmed by errors, misrepresentations, or other deficiencies in a foreclosure process on their primary residence during 2009 and 2010 should consider requesting a review through the third-party review process required by the enforcement actions taken by the OCC and the Board of Governors of the Federal Reserve System.
Q. Can I contest the remedy I am given?
A. The enforcement orders provide additional rights to borrowers who may have been harmed by inappropriate or unfair practices by bank servicers, but they do not take any rights away from borrowers. If you are not satisfied with the remediation offered through the process the agencies have set up, you may still avail yourself of any legal remedies you now have.
Q. What kind of remedy can you provide for people who unfairly lost their homes as a result of illegal or inappropriate servicing practices?
A. The primary goal of remediation is to identify and compensate individuals who were financially injured by improper foreclosure actions. Compensation or remediation must be based on the individual facts of each case, and recommendations will all be made by the independent consultant. Final remediation plans will be subject to review by the OCC and the Board of Governors of the Federal Reserve System.
Q. Are you going to mandate principal reductions? Might the AG settlement do that?
A. OCC supports principal reduction as part of a servicer’s tool kit to provide sustainable modifications provided they generate a higher net present value for mortgage investors. However, the OCC is not imposing mandatory principal reductions.
Q. My foreclosure action occurred before January 1, 2009. Am I out of luck?
A. As long as foreclosure action involved your primary residence and was active during any part of January 1, 2009 through December 31, 2010 and the mortgage was serviced by one of the participating servicers; you may be eligible for a review. The heavy foreclosure activity during those years exacerbated the deficiencies found in the examinations that were conducted in the fourth quarter of 2010, which is why we focused on that period of time. However, if you believe your servicer engaged in inappropriate or unfair practices with respect to your foreclosure, you still have all of your rights to seek civil remedies outside of the requirements of the enforcement action.
Q. What information will people need to provide to request a review?
A. The form will require information on the borrower and responses to questions about how the borrower believes he or she may have been financially injured. There is no charge to customers for a review. The review will not be reported to any of the credit bureaus and will not affect a customer’s efforts to pursue options related to a foreclosure.
Q. What constitutes financial injury?
A. Listed below are examples of situations that may have led to financial injury. This list does not include all situations.
•The mortgage balance 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.
•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 service member did not waive his or her rights under the Servicemembers Civil Relief Act.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: | bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND, Wrongful Foreclosure Compensation Claim Program