Nov. 2, 2011 – Four large mortgage servicers – GMAC Mortgage, HSBC Finance Corporation, SunTrust Mortgage and EMC Mortgage Corporation – are now required to provide an independent review upon request and possible compensation to homeowners who believe they were wronged by the companies in 2009 and 2010 foreclosure proceedings, the Federal Reserve announced yesterday.
The reviews and compensation are part of enforcement actions the Fed issued against the mortgage companies in April in response to reported misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing. Borrowers must request reviews by April 30, 2012.
Borrowers are eligible for a review if their primary residence was in the foreclosure process in 2009 or 2010, whether or not the foreclosure was completed. The Fed actions require the servicers to compensate borrowers for financial injury resulting from deficiencies in their foreclosure processes. A number of servicers supervised by the Office of the Comptroller of the Currency must also reach out to borrowers, conduct reviews and compensate them if deficiencies are found.
According to yesterday’s Fed announcement, the independent consultants will also review certain cases of foreclosure actions in 2009 and 2010 to determine whether borrowers suffered financial injury. Specifically, they will review cases involving members of the military who were covered by the Servicemembers Civil Relief Act. In addition, the consultants will look into cases where borrowers had previously filed complaints with the servicers about pending foreclosure actions.
The Fed also plans to announce monetary penalties in connection with its enforcement actions against these servicers.