released some data that explains how the Independent Foreclosure Review payments are being
distributed. As you may recall, the Independent Foreclosure Review was
most accurately described as a
Shortly prior to the release of a very damning Government Accountability
Office report on the program, most of the 14 banks involved in the IFR
agreed to terminate the reviews and simply send cash to eligible homeowners.
These payments are supposed to compensate homeowners for the misconduct
of banks during the foreclosure boom years of 2009 and 2010.
41% of the homeowners eligible for relief under the IFR lost their homes.
More than 50% of the homeowners eligible for relief are receiving roughly
the same sum of money. There's a rather decent likelihood that some
of the 50% includes some of the 41% who lost their homes.
So how much money will the majority receive? Between $300 and $500. It's
a shocking sum.
When the IFR was announced, the OCC had stated that servicers had violated
state and federal laws in processing foreclosures. This was a Very Big
Deal. Apparently, things have changed in the last two years.
Since the banks gave up trying to review foreclosure files, many homeowners
were put into "possible error" categories that may not reflect
the facts of their situation. The entire program only had an 11% response
rate, so very few eligible individuals filled out claim forms. Clearly,
the banks had very little incentive to dig and investigate -- in particular
when investigating could increase payouts.
Borrowers who received a loan modification, but who apparently may have
been mishandled, will receive between $300 and $500. Borrowers who were
never considered for a loan modification (or who applied and were ignored)
and ultimately lost their homes may receive between $400 and $800. The
larger payments in each category go to those who filled out claim forms.
Only 8,700 eligible homeowners will receive large sums. Those payouts will
range from $24,000 to $125,000. Presumably, individuals receiving the
largest payouts lost their homes in rather spectacular fashion. That doesn't
provide much relief for those who lost their homes due in part to servicer neglect.
If you are waiting for a check, or if you have received your check, then
I'd love to hear how much you received. There's a payout category
for homeowners who were denied loan modifications that pays between $1,000
and $6,000. I would be highly interested to know how far into the loan
mod process one had to be to get that much money.
On the whole, this entire farce has ended with a whimper. At the end of
the day, most people will be receiving a few hundred dollars. I suppose
that's better than nothing. We will most likely never know just how
many people were harmed by servicer and lender misconduct -- it certainly
doesn't seem that our regulators care to find out.