Few Ohio homeowners opting for foreclosure help

Published 8:55 am Monday, July 23, 2012

DAYTON (AP) — Few eligible Ohio homeowners are having their foreclosure cases reviewed for free even though they might receive up to $125,000 if lenders wrongfully caused them financial harm.

The reviews are to determine if borrowers suffered financial harm due to errors, misrepresentations, or other deficiencies in the foreclosure process, the Dayton Daily News reported. Lenders must compensate them for such injuries.

Mortgage lenders required to offer borrowers the independent foreclosure review sent notification letters to about 140,700 eligible Ohioans who faced foreclosure in 2009 and 2010. But a report by the federal Office of the Comptroller of the Currency says only 6,000 Ohioans had requested reviews as of May 31. The review request deadline is Sept. 30.

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Nationally, more than four million people were mailed letters last year. As of June, the response rate was 5 percent, or about 200,000 people, according to the U.S. Government Accountability Office.

The review resulted from consent orders issued against 14 lenders in April 2011 by the Federal Reserve and Comptroller of the Currency. The orders require lenders to use third parties to do the reviews requested by borrowers.

To qualify, homeowners had to have a loan serviced by one of the 14 lenders and had foreclosure action against their property in the two-year period. The lenders include Bank of America, JPMorgan Chase and Wells Fargo among others.

Harmed borrowers could receive cash payment and a correction to their credit report. They also could receive payment for lost equity, reimbursements for related out-of-pocket costs, and other types of remediation.

Borrowers could potentially receive $1,000 if the lender never solicited a loan modification, $2,500 to $15,000 if a loan modification was denied in error, or up to $125,000 if the borrower was not in default when the foreclosure started, according to the HomeOwnership Center of Greater Dayton.

There is no cash compensation if a foreclosure is not completed, but the foreclosure will be suspended, according to government officials.

But eligible homeowners have been difficult to find. Many have lost their homes, and others are reluctant to open mail from a bank, said Beth Deutscher, executive director of the HomeOwnership Center.

“It doesn’t surprise me the response rates are low,” said Deutscher.

Efforts to reach borrowers have been criticized for not doing more in areas such as testing readability of documents, working with consumer groups and spelling out the financial remediation available, according to a GAO report this month.

It found efforts to reach homeowners have improved in the last year, but regulators and bankers could still do better.

Lenders will continue to work with regulators to try to reach customers, said the Housing Policy Council of The Financial Services Roundtable, which represents mortgage companies.

“If a homeowner is experiencing difficulty with their mortgage, we urge them to contact their servicer or a nonprofit counselor at an independent HUD-certified counseling agency,” said Paul Leonard, the council’s senior vice president of government affairs.