Postcard: Independent Foreclosure Review

Did you receive a postcard about the Independent Foreclosure Review?


The Minnesota Homeownership Center and members of the Homeownership Advisors Network have participated in a mailing to thousands of Minnesota families that may have been involved in a foreclosure or tried to work on a loan modification in 2009 or 2010, to let them know that they may be eligible for financial compensation or another remedy.


Here's a copy of the postcards that have been mailed:

Front of Postcard - Click to Enlarge

Back of Postcard - Click to Enlarge

While the Center doesn't have exact numbers... we do know that homeowners, or former homeowners, requesting a formal review of their bank's foreclosure procedures have been far less than the regulators anticipated.  In a nutshell: families that may be eligible for some sort of payment may be leaving money on the table.


WHAT IS THE INDEPENDENT FORECLOSURE REVIEW (IFR)?
Federal banking regulators (the Office of the Comptroller of the Currency, simply known as the OCC, the Office of Thrift Supervision and the Board of Governors of the Federal Reserve System have created a process by which homeowners may request an independent review of their foreclosure process if they meet two major criteria:

1. They were part of a foreclosure action on their primary residence any time from January 1, 2009 to December 31, 2010;
2. Their loan was serviced by one of the 14 participating mortgage servicers.  (See list below).

If the review finds that financial injury occurred because of the servicer’s errors, misrepresentations or other deficiencies in the foreclosure process, the customer may receive compensation or other remedy.

NOTE:  "Foreclosure Action" can mean anything from receiving a notice of intent to foreclose (even if your payments were brought up to date) all the way through having lost the home at a foreclosure or Sheriff's sale.  Even homeowners whose loan entered any point of the foreclosure process in 2009 or 2010... and are still delinquent, but the Sheriff's sale has not yet taken place, are eligible.

IS IFR A SCAM?
NO.  However it is important to remember that NO ONE should charge you a fee to help 'facilitate' or 'improve your odds' of receiving compensation.  NEVER PAY FOR HELP.


I'VE ALREADY FILED A COMPLAINT WITH MY LENDER... IS THAT ENOUGH?
No.  Your bank or servicer may have their own internal review process.  However, if your mortgage loan meets the initial eligibility criteria, you should submit a Request for Review Form to ensure your foreclosure action is included in the Independent Foreclosure Review process.


WHAT BANKS/SERVICERS ARE PARTICIPATING?
Your mortgage must have been serviced by one of the 14 participating mortgage lenders/servicers or their affiliates:

• America’s Servicing Co.
• Aurora Loan Services
• BAC Home Loans Servicing
• Bank of America
• Beneficial
• Chase
• Citibank
• CitiFinancial
• CitiMortgage
• Countrywide
• EMC
• EverBank/EverHome
• Mortgage Company
• Financial Freedom
• GMAC Mortgage
• HFC
• HSBC
• IndyMac Mortgage Services
• MetLife Bank
• National City Mortgage
• PNC Mortgage
• Sovereign Bank
• SunTrust Mortgage
• U.S. Bank
• Wachovia Mortgage
• Washington Mutual (WaMu)
• Wells Fargo Bank, N.A.
• Wilshire Credit Corporation

I'M INTERESTED IN LEARNING MORE... WHAT DO I DO?


Step One:  Call the Minnesota Homeownership Center: 651-659-9336
or Toll Free: 866-462-6466 with any questions.


Step Two:  Visit the Independent Foreclosure Review website:

   www.IndependentForeclosureReview.com


As always... if you're struggling with your mortgage - or know someone who is - the Minnesota Homeownership Center serves as a FREE resource to Minnesota homeowners.  Call us today with questions about the Independent Foreclosure Review... or other programs, resources and assistance available to prevent foreclosure, TODAY. 

Reminder on Deficiency Judgments

The Wall Street Journal published an excellent article this weekend on the dangers of deficiency judgments.


A deficiency judgment is “a judgment lien against a debtor, defendant or borrower whose foreclosure sale did not produce sufficient funds to pay the mortgage in full.”


In plain English: a homeowner can be sued for the difference between the amount the bank received when they auctioned off the house at the Sheriff’s sale, and the amount of the outstanding mortgages.


In the Wall Street Journal article, many of the former homeowners had purchased in Florida, where judgment can be sought on ANY mortgage deficiency.  However, Minnesota is a ‘Non-Recourse’ state. This means that FIRST lien holders CANNOT seek judgment (cannot sue) former homeowners for outstanding funds*.


HOWEVER... any “Junior”, or "Second" lien-holders CAN. If there is more than one mortgage on the property – or if there is a line of credit or HELOC taken out against the property – THOSE lenders CAN sue the former property owner for payment of any outstanding debt.


Lenders can take up to SIX YEARS in Minnesota to decide whether or not to sue for any deficiency.  In many cases, the lender won't be the ones seeking judgment.  They'll simply sell the outstanding deficiency to collections companies, for pennies on the dollar, who will then be relentless in their efforts to collect.


One of the scariest quotes from the article comes from a representative of one of the collection agencies:

"We are waiting for the economy to somewhat heal so that it's a better time to go after people," says Douglas Hannah, managing director of Silverleaf.

The MN Home Ownership Center has a helpful fact sheet on its website about deficiency judgments. You can download the fact sheet here.


Deficiency Judgments are just ONE of the MANY considerations struggling homeowners need to think about when facing a possible foreclosure. If you, or someone you know is struggling with mortgage payments... don't wait until it's too late. To find your local non-profit, FREE Foreclosure Counselor, click here. For additional information about preventing foreclosure in Minnesota, click here.




* There are situations in which a homeowner can open themselves up to deficiency on a first lien.  In a short sale situation, if the negotiations aren't carried out properly homeowners may unwittingly sign paperwork that allows the bank to seek judgement.  This occurs when the bank is willing to release the lien so a short sale can occur, but does not release the underlying debt.  Homeowners that are selling in a short sale situation need to be EXTREMELY careful about the documents they sign before selling.

Bank of America Halts Foreclosures in Minnesota

According to a press release on the Bank of America website, BoA has halted ALL foreclosure sales in all 50 states.  This, obviously, includes Minnesota.

The actual text of the press release is:

Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus.

The wording of their press release is interesting.  It states that they will halt "foreclosure sales" until they've finalized their internal reviews... but it does not state anything about the REST of the foreclosure process.  Will they continue all the steps PRIOR to the Sheriff's sale in Minnesota?  (For an overview of the steps, view our Foreclosure Process Infographic). 

Will other lenders follow suit?  Let us know what you think in the comments.

We will continue to monitor the situation... and let our readers know of updates as they become available.

Struggling homeowners should be aware that this decision by Bank of America will NOT, ultimately, end their financial crisis.  If you are struggling with payments - whether you are a Bank of America client or not, the best resource in Minnesota the MN Home Ownership Center's network of FREE Foreclosure Counselors.  These counselors can work with you to find individualized solutions to YOUR personal mortgage crisis and answer questions about how foreclosure related policies and programs affect you.  To find your closest counselor, click here.


UPDATE: We've received information from Bank of America... that specifically states that the ONLY part of the process that is halted is the actual sale date... and ONLY those sale dates that fall between October 9, 2010 and November 1, 2010:

First, I want to clarify that there is no moratorium in place. What we have done is postpone any scheduled foreclosure sales, that fall between 10/9 and 11/1 to a date after November 1st. This is to allow for additional time to complete necessary document reviews. All other foreclosure activity will continue as usual.

MN Foreclosure Infographic

As many of you know, Minnesota state law determines the steps that lenders and servicers must take in order to foreclose on a residential property in Minnesota.  Back in 2008, the Center created a visual timeline of this process and it quickly became one of the most frequently downloaded documents from the Center's website.

We’re pleased to announce the Center has created a new and improved Minnesota foreclosure timeline graphic!

This consumer-friendly chart is an Infographic with pictorial representations of the different stages of foreclosure, in addition to text that helps explain each step.

Here's an sample of the new graphic:

A high-quality PDF version is available on the Center's website (along with over a dozen other helpful fact sheets), here.

If you, or someone you know is facing foreclosure or struggling with mortgage payments - THERE IS HELP.  The Center's network of Foreclosure Prevention Specialists are available to help... and all services are FREE. Click here for more information.

Foreclosure Prevention in SE MN

As many of you are aware, the Minnesota Home Ownership Center has teamed up with the SE Minnesota Association of Realtors® to offer a FREE foreclosure training workshop to provide information to professionals on how to help struggling homeowners:

Thursday, March 04 ………. 11:00 AM - 12:30 PM
Ramada Hotel & Conference Center,
Rochester, Minnesota
RSVP Required: here

The training will provide an overview of the foreclosure process, where to refer homeowners and how to prepare them to talk with a housing counselor or loan servicer as well as information on national assistance programs like Making Home Affordable.

The training is specifically designed for staff from public, private, and non-profit organizations that work with struggling homeowners – but who do not normally work with mortgage foreclosure as part of their job.  For more information, or to register, click here.


EVENT WILL BE WEB-STREAMED LIVE!
Space at the event is limited... however, due to the amazing response we've received (over 150 people have already registered!)... the SE Minnesota Association of Realtors® will be offering a LIVE WEBSTREAM of the workshop!  Watch the web stream (on March 4th) here.


If you weren't aware of the workshop... it might be because you haven't signed up for our bi-weekly electronic newsletter.  You can subscribe to the newsletter here.

Center updates the MN Foreclosure Process Chart

One of the most frequently downloaded documents from the Center's website is the MN Foreclosure Process timeline document. The Center has updated the information several times since the original document was created in 2008.

Once again the we've updated the "MN Foreclosure Process" document to include information on the timing homeowners can anticipate receiving a "Pre-Foreclosure Notice" as well as the window-of-opportunity homeowners have to postpone the Sheriff's Sale date under MN State law.

For a high-quality (printable) PDF of the Foreclosure Process Chart, click here.

UPDATE: The chart is also available in SPANISH. Click here.