Borrowers’ Quick Reference Guide to the Financial Remediation Framework
On June 21, 2012, the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System released a financial remediation framework that provides examples of errors in foreclosures covered by the regulators’ consent orders that require compensation or other remediation as directed in the regulators’ April 2011 orders. The consultants will use the framework to recommend remediation for financial injury identified during the Independent Foreclosure Review. The servicers will prepare remediation plans based on the consultants’ recommendations. The federal banking regulators must approve each servicer’s remediation plan. The framework helps ensure that similarly situated borrowers receive similar treatment.
Remediation may include suspending a pending foreclosure or rescinding a completed foreclosure, providing lump-sum payments, reimbursing improper fees plus interest, providing a loan modification, and correcting credit reports and other errors in the borrowers’ records.
Lump sum payments can range from $500 to $125,000 plus equity in the most egregious cases. The remediation amounts contained in the financial remediation framework are intended to reflect financial harm caused by errors in the foreclosure and loss mitigation process.
Examples of actions that may require financial remediation or compensation include:
- Foreclosing on a borrower in violation of the Servicemembers Civil Relief Act;
- Foreclosing on a borrower who was not in default on the mortgage;
- Failing to convert a qualified borrower to a permanent modification after successful completion of a written modified payment plan that was supposed to lead to permanent modification;
- Foreclosing on a borrower prior to expiration of a written modified payment plan that leads to permanent modification, while borrower was performing all requirements of the written plan;
- Denying a borrower’s loan modification application that should have been approved;
- Failing to offer loan modification options as required by an applicable program;
- Giving a borrower a loan modification with a higher interest rate than should have been charged under the relevant loan modification program;
- Foreclosing on a borrower in violation of federal bankruptcy laws;
- Not providing a borrower with proper notification during the foreclosure process; and
- Committing errors that did not result in foreclosure, but resulted in other financial injury.
The examples cover many categories, but do not address all possible scenarios. Not all errors result in financial injury.
Anticipated questions and answers
- When do I need to request a review to qualify for compensation for errors on my foreclosure?
The deadline for requesting a free review closed on December 31, 2012.
- Who was eligible?
- To be eligible, the mortgage must have been active in the foreclosure process between January 1, 2009, and December 31, 2010, the property securing the loan must have been the primary residence, and the mortgage must have been serviced by one of the servicers listed on Independent Foreclosure Review.
- How much money can I get for errors on my foreclosure?
Remediation depends on the financial injury that occurred. Consultants will use the framework provided by the regulators to recommend compensation or other remediation for financial injuries they find. Remediation may include suspending a pending foreclosure or rescinding a completed foreclosure, providing lump-sum payments, reimbursing improper fees plus interest, providing a loan modification, and correcting credit reports and other errors in the borrowers’ records. Lump sum payments can range from $500 for lesser injuries to $125,000 plus equity in the most egregious cases.
- How much does the review cost me?
It is free.
- When will I receive the remediation or compensation for errors on my foreclosure?
Where errors are found and remediation is required, checks will begin to be mailed to affected borrowers during the second quarter of 2014 and will continue through the summer of 2014.
- How will I be notified of the results of the review?
Borrowers who asked for a review will receive a letter advising them of the results. Where errors are found and remediation is required, OneWest will send a letter describing the payment or other compensation to be provided and the next steps the borrower will need to take. If no errors are found that require remediation, Rust Consulting, Inc., will send the letter notifying the borrower of the results.
- Why are the remediation payments being mailed by the servicer?
Under the Financial Remediation Framework, remediation in many cases requires additional follow-up action by the servicer. The OCC directed OneWest to mail notifications of findings of error requiring remediation and required OneWest to have a remediation specialist available to answer borrower questions about their remediation packages. Rust Consulting, Inc. the administrator who processed the IFR Request for Reviews does not have information necessary to assist borrowers with questions about their remediation packages. The OCC directed Rust Consulting, Inc. to prepare notifications to borrowers whose Independent Foreclosure Review resulted in a finding of “No Harm,” as additional remediation follow-up is not required by the servicer.
- Could borrowers be eligible for remediation, even if they didn’t file a request for review?
Yes. The consultant also reviewed other files to find borrowers who suffered financial injury because of foreclosure errors. OneWest is required to compensate all injured borrowers identified as part of this review.
- What can I do if I disagree with the decision? Can I appeal?
The results of the Independent Foreclosure Review are considered final, and there is no process for appeal of the findings or the remediation offered. The results of the Independent Foreclosure Review are not intended to have an impact on any other options the borrower may pursue related to their mortgage loan. Examiners from the OCC have overseen the process to ensure reviews were conducted in a fair and impartial manner. If you have another complaint about the servicing of your current or prior mortgage, you may contact the OCC’s Customer Assistance Group at www.helpwithmybank.gov or the Consumer Financial Protection Bureau at www.cfpb.gov.
- Does requesting a review prevent me from suing the servicer? Will I be required to waive my rights to sue by accepting compensation?
Submitting a request for review does not preclude borrowers from pursuing other legal remedies available related to their foreclosure. Servicers may not ask a borrower to release any claims in order to receive remediation payments.
- I did not lose my home to foreclosure, but there were still errors in the process. Can I be compensated for those errors?
Yes. The Independent Foreclosure Review is reviewing both completed foreclosures and any foreclosures that were in process in 2009 or 2010. You do not have to have lost your home to qualify.
- I lost my home to foreclosure and was evicted, any chance in getting it back?
The framework includes several scenarios where remediation includes suspending or rescinding a foreclosure and restoring ownership of the home if possible. More information on this issue is available in categories 1 through 5 of the framework and question 17 of extensive frequently asked questions.
- Will a remediation payment affect my public assistance benefits?
- There may be an impact to your eligibility for any public assistance benefits depending on the amount of the payment or other compensation. We suggest you consult your caseworker, a tax advisor, or qualified individual or other organization if you have questions regarding possible implications of accepting a payment or other compensation.
- Do I need to contact an attorney after I receive the notification letter?
It is your choice whether to contact an attorney or not. If you are currently represented by an attorney with respect to a foreclosure or bankruptcy case regarding this mortgage, please refer your letter to your attorney.
- How does this affect my taxes?
- Any payment or other compensation made to you as a result of the Independent Foreclosure Review may be reported to the IRS and may have tax implications. We suggest you consult a tax advisor if you have questions regarding possible implications of accepting a payment or other compensation. For more information, you can visit the Internal Revenue Web site at irs.gov/Help-&-Resources.
- We are going through bankruptcy, what should we do?
If you are currently represented by an attorney with respect to a foreclosure or bankruptcy involving this mortgage, please refer your letter to your attorney. We recommend you consult an attorney if you have questions about possible implications to your bankruptcy.
- I have more questions about my remediation under the OneWest Independent Foreclosure Review. Where can I get more information?
- If you have any questions about your remediation under OneWest Independent Foreclosure Review, call 1-800-500-6097, Monday through Friday, 8 a.m.–8 p.m. CST.