Victims of improper foreclosure practices can submit claims

Fourteen mortgage servicers have begun mailing out 4.3 million letters to potential victims of robo-signing. The letters will invite borrowers to submit their cases for a free review by independent consultants.

Aggrieved homeowners ensnared by a foreclosure system riddled with misconduct and error are set to get their first shot at winning some cash back from the banks.

Under orders from federal regulators, 14 mortgage servicers on Tuesday began mailing out 4.3 million letters to potential victims of wrongful foreclosure practices. The letters will invite borrowers to submit their cases for a free review by independent consultants that are funded by the lenders but vetted by regulators.

Borrowers may be compensated if the reviewers and regulators find that the homeowners were harmed financially.

"These requirements help ensure that the servicers provide appropriate compensation to borrowers who suffered financial harm as a result of improper practices," said John Walsh, acting comptroller of the currency, whose agency regulates the nation's largest banks. The Federal Reserve has also issued the enforcement orders.

Those letters will go out to people who were in foreclosure in 2009 and 2010, a period identified by the regulators as the peak of foreclosure misconduct. In addition to the mailings, an advertising campaign will begin shortly to get the word out to people potentially harmed by the errors.

The start of the review process by the regulators is the first tangible action to stem from widespread revelations last year that banks made a host of errors when foreclosing on troubled borrowers.

Among other problems, mortgage servicers employed so-called robo-signers — people who signed foreclosure documents en masse without properly reviewing them — and took back homes from people even though they were being reviewed for loan modifications.

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http://www.latimes.com/business/realestate/la-fi-foreclosure-errors...