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Independent foreclosure review checks usually only $300

Independent foreclosure review checks are finding their way into the hands of Americans wrongfully foreclosed upon, most commonly for $300 which some are surprised to receive at all, while others feel insulted.

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Independent foreclosure review checks

Independent foreclosure review checks

In March, 4.2 million Americans were sent notices in the mail from Rust Consulting that they would receive compensation as part of a massive settlement reached between the federal government and 13 mortgage servicers, ranging from $300 to $125,000 depending on financial harm by the events surrounding their foreclosure activity, as assessed by an independent third party consulting firm.

Fully 2.4 million borrowers will receive a $300 independent foreclosure review check, and roughly 1,300 borrowers will receive $125,000, with the larger checks going primarily to military members whose illegal foreclosures violated the Servicemembers Civil Relief Act. The remaining borrowers will see roughly $500 to $800 checks.

The $1.5 billion of settlement funds were allocated to compensating wronged borrowers wrongfully foreclosed upon after January 1, 2008, primarily as a result of robo-signatures wherein no human reviewed the foreclosure file prior to homes being repossessed, leading to thousands of illegal foreclosures. Many homeowners were either refused a loan modification or the arrangements with the bank were simply missed by the non-existent review process.

Most report receiving a $300 check

Homeowners were notified by mail of their right to file a claim and originally, and the uniform payment amount was said to average $2,000 per borrower, but have been dispersed in a less than uniform way. Some borrowers claim they were notified they would be receiving one amount and actually received less – most report receiving a $300 check.

It is said that borrowers who get a check in the mail are not waiving any rights to sue by cashing their check, and may seek additional relief in the courts and are still eligible for additional restitution through banks and servicers. Some borrowers are reporting, however, that they are being told by Rust Consulting over the phone that after the review period they will have no recourse, so confusion continues.

Some independent foreclosure review checks subject to taxes

Short sale expert, Melissa Zavala notes that some checks are subject to taxation, pointing to the Independent Foreclosure Review site which says that the entire “base payment” may be subject to taxation as income depending on the borrower’s individual circumstances.

For checks in an amount of $600 or greater, the Paying Agent will report such payments as income to the IRS and appropriate state agencies and to borrowers on a Form 1099 MISC.

Consumer sentiment varies

Andrita Sanford said, “This is disgraceful. People lost their homes and had to uproot their families yet all they will receive is a $300! The banks shady practices haven’t hurt them as much as it has destroyed once thriving neighborhooods [sic] & communities. If they really want to help people, they should remove ALL negative mortgage debts from the credit reports of those that were affected by this act of corruption.”

This sentiment has been common with online commenters and principle forgiveness is the cornerstone of the biggest battle regarding housing, with Federal Housing Finance Agency (FHFA) Director, Edward DeMarco being asked to resign for his continued refusal to forgive debt, or, as some consumers have requested, remove it from their credit.

ALR said, “Got $300… lost everything, but am thankful for even this paultry [sic] amount.”

Michael L. who lost his own home opined, “The idea that people are complaining about getting an additional check for such and such amounts because they didn’t pay their bills in the first place is comical (and is sad at the same time). Maybe it’s the sue happy reality we live in or the common belief that we’re all entitled to a handout nowadays.”

One commenter noted that $300 is “a slap in the face,” telling their bank to “just keep it and stop insulting me.”

Details of the independent foreclosure review

AGBeat columnist, Melissa Zavala wrote, “As you may recall, the Independent Foreclosure Review is part of the settlement associated with the robo-signing debacle of 2010 (title my own). As part of this review, thirteen mortgage servicers and their affiliates identified customers who were part of a foreclosure action on their primary residence during the period of January 1, 2009 to December 31, 2010.”

Zavala continued, “These 13 mortgage servicers sent solicitation letters to 4.2 million potential victims of robo-signing and other foreclosure-related (and potentially fraudulent) matters. These letters provided homeowners the opportunity to request an independent review of their foreclosure process (a.k.a. Independent Foreclosure Review). If the review found that financial injury occurred as a result of errors, misrepresentations, or other deficiencies in the servicer’s foreclosure process, the customer might receive compensation or another remedy.”

The deadline to request an independent review was December 31, 2012 and eligibility is outlined here.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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5 Comments

5 Comments

  1. David Kahl

    May 7, 2013 at 12:01 am

    When I first received the notice of Independent Foreclosure Review, I was certain that it was junk mail. This was immediately after we lost our home of 22 years. When my sister brought it to my attention, I looked into it, saw that the Federal Reserve was behind it, and submitted my application, accompanied by a letter summarizing my claim and considerations that should be made during review. There were 23 evidentiary points, including the fact that there were two conflicting Truth in Lending documents in the title company file, “signed” on the same day; there were 11 points given to tangible financial damages.

    The fact that I was assured that a course of action – the independent review, itself – should have been enough to press the process forward. There are legal and fiduciary obligations involved and this should be reason enough. The further fact that I offered a guideline to assist their investigation should have made it easier for them. The fact that those regulating the system decided to pass it off to consultants to act on their behalf was alarming, but understood; that these same people would settle on “our behalf” is shameful, that they should take a huge percentage for not fulfilling their obligation is worse, and the check they sent – insulting.

    I received $800 a week ago. I need it, but haven’t cashed it. It took me until today to tell my wife, who is pissed, and daughter, who wept.

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

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Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

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…Click here to continue reading this story…

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