$125,000 for your trouble? It's certainly worth asking for
If your mortgage servicer cheated you or made promises it didn't keep after you fell behind on your loan payments during the foreclosure crisis, you could be in for a payday.
You have to ask for the money -- or more specifically, you have to fill out a form asking for a review of your case.
If it turns out that your mortgage servicer didn’t follow the rules, the least you’ll get is a new and improved credit report and the most is a check for $125,000.
The "independent foreclosure review" sounds like something a scammer cooked up, but it’s a real deal that 27 mortgage servicers made with the federal Office of the Comptroller of the Currency.
There’s a website (IndependentForeclosureReview.com) where you can read the fine print, but here’s the bottom line.
These three things qualify you for a review:
- Your mortgage was in foreclosure at any point between Jan. 1, 2009, and Dec. 31, 2010.
- Your house was your primary residence (meaning it wasn’t a vacation or second home).
- Your loan was serviced by one of the 27 companies that agreed to the review deal.
Somewhere around 4.4 million homeowners meet those three requirements, but only just over 200,000 of them have asked for a review.
A Government Accounting Office report said the reason so few people have asked for a review is that the letter that everyone was sent is too hard to read, the website explaining the deal is too hard to read and the form you use to ask for the review is -- you guessed it -- too hard to read.
The GAO is right.
But I’m not buying that this is why so few people are signing up. Instead, I think there are two groups of people ignoring the case review offer for completely different reasons.
One group is completely burned out because they got a ton of junk mail from ripoff companies after their mortgage servicer filed foreclosure.
If you’ve ever gotten a speeding ticket, you know the kind of mail I’m talking about -- dozens of letters from attorneys offering to represent you. In a default proceeding, you also get dozens of letters and calls from scammers promising to save your house if you send them a check.
Group No. 2 is people who got foreclosed on because they didn’t pay their loan and didn’t have enough income to pay even a reduced monthly payment.
They’re like a guy I knew in Miami who lied about his income on a mortgage application to get a condo he couldn’t afford, never made a single payment and then lived in the condo for three years while the Florida court system ground away.
If you’re in that first group, I hope you’ll fill out the form and ask for a review.
It’s not like you had to lose your house to collect.
You could also get a payment if:
- The servicer charged you the wrong fees.
- You asked the lender to lower your payment and submitted all the documents you were supposed to turn in, but instead of giving you a decision, the bank foreclosed.
- You got the servicer to agree to lower your payment, and you made all those new payments, but the servicer foreclosed anyway.
- The servicer said you owed more at the foreclosure sale than you really did.
- You were in bankruptcy when the servicer foreclosed.
- The servicer didn’t follow the special rules that cover foreclosures on homes owned by active-duty military service members.
- There was an error in the process and you did a short sale of your house, or the foreclosure sale hasn’t happened yet.
On the other hand, if you’re like the guy I knew in Miami, then I sure hope you don’t ask for a review. You don’t deserve a second windfall.