NEW YORK (CNNMoney) - Homeowners whose lenders played fast and loose with their foreclosures and who may be in for a payday have a little extra time to get their paper work filed.
Homeowners whose primary residence was part of a foreclosure action between January 1, 2009 and December 31, 2010, and whose home loan was serviced by a participating servicer, may be eligible for an Independent Foreclosure Review.
Eligible customers needed to mail a letter by December 31, 2011 that explained the Independent Foreclosure Review process and a Request for Review Form that identified some examples of situations that may have led to financial injury. The deadline for form to completed and postmarked was moved from the end of April to no later than July 31, 2012.
Should the review find that "financial injury" occurred as a result of an error or other deficiencies in the way the foreclosure process was handled, the homeowner may receive compensation for their losses. However, just how much money the borrower will receive has yet to be determined, according to Joe Evers, the deputy comptroller for large banks at the Office of the Comptroller of the Currency (OCC).
The reviews are part of a larger enforcement action taken against 14 large mortgage servicers last April by the OCC, the Federal Reserve and Office of Thrift Supervision in the wake of the "robo-signing" scandal.
As part of that action, the lenders, which include Bank of America, Chase, Citibank, GMAC Mortgage, HSBC Finance, Wachovia, Washington Mutual and Wells Fargo, agreed to clean up their foreclosure practices and repay victims.
"The independent foreclosure review is a significant component of the mortgage servicers' compliance with our enforcement actions," said acting Comptroller of the Currency John Walsh.
When foreclosures flooded the system after the housing bust, many mortgage servicers became more cavalier in the way they handled foreclosures. Affidavits and other documents were signed by low-level employees who had little or no knowledge of what they were attesting to, attorneys hired to manage the foreclosure process were providing inadequate oversight and many bank employees were ignoring requirements to halt foreclosure procedures if loans were in the modification process.
The mortgage servicers agreed to review foreclosure cases that occurred between January 1, 2009 and December 31, 2010 and determine if borrowers suffered financial losses as a result of any of these practices.
Evers said that the consultants will examine each foreclosure on a case-by-case basis and could spend months coming to their conclusions.
He said there was no firm estimate of how much the claims could wind up costing the banks but it could certainly run into the "hundreds of millions of dollars."
If you believe you may be eligible but do not receive a letter, you may visit http://independentforeclosurereview.com/ for more information about the review process. Assistance is also available at 1-888-952-9105.
The reviews are completely free for all eligible borrowers. Consumers should beware of anyone requesting to be paid for this service or who claims they can influence the outcome of the review.
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