The calendar year is running out, and so is your time to possibly reverse or suspend your foreclosure or even collect a windfall if your bank didn't play fair when it tried to take your home.
If you faced foreclosure actions in 2009 or 2010 by one of 14 banks or mortgage servicers and their affiliates, you may request a neutral review of the foreclosure proceeding to determine whether it was handled properly. If it wasn't, the bank could be ordered to right the wrong.
The deadline to apply for a review, which is free and authorized by federal regulators, is Dec. 31.
At least 23,000 homeowners in the Lehigh Valley area may be eligible, yet only about 5 percent of them responded to notices they were mailed about their rights, according to federal data through late September.
The Independent Foreclosure Review program was established after federal banking regulators said they found banks had mishandled mortgages and foreclosures.
The Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Office of Thrift Supervision required the banks and mortgage servicers to correct deficiencies, identify homeowners harmed by foreclosure errors and provide compensation or other remedies.
"These reforms will not only fix the problems we found in foreclosure processing but will also correct failures in governance and the loan modification process and address financial harm to borrowers," John Walsh, acting comptroller of the currency, said last year in a statement announcing the reviews.
"Our enforcement actions are intended to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair and orderly mortgage servicing process going forward," Walsh said.
One of those reforms is the requirement for the mortgage servicers to take a second look at how they handled foreclosures. The banks involved include the major players in the industry, such as Bank of America, Chase, Citibank, Countrywide, GMAC Mortgage, HSBC, PNC Mortgage, Wachovia Mortgage and Wells Fargo.
Pending foreclosures could be suspended or completed foreclosures could be rescinded if a review finds problems. Homeowners also could be eligible for payments of up to $125,000 plus equity in the most egregious cases.
The consultants doing the reviews were selected by the banks and mortgage servicers and approved by regulators to ensure they can provide an independent review. They generally are large auditing and accounting firms and bank consulting firms, which are supplemented by law firms and other specialists as needed, said Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency.
Among the problems they are looking for are whether borrowers were foreclosed on when they weren't in default; were denied a loan modification that should have been approved; did not get legally required notifications; were charged improper fees; or were foreclosed on in violation of bankruptcy laws or a law that protects military service members.
Banking regulators have been trying to spread the word about the approaching deadline, which initially had been in April but was extended. They've taken out full-page newspaper ads and reached out to community groups that work with homeowners in distress.
"Borrowers do not need to have lost their home to foreclosure to participate in the review," LaVonda Bailey, a Federal Reserve Board official, said in October during a conference call promoting the program.
You also could be eligible for a review if your home was in the foreclosure process but was removed because you caught up on your payments or entered a payment or modification plan; if you sold your home; sold your home in a short sale; turned it over to the bank through a deed-in-lieu program; or if the foreclosure remains pending.
Banks sent notices to about 4 million potentially eligible homeowners last year. But if you didn't get a letter you still may apply, and the eligibility criteria aren't strict.
If the foreclosure actions occurred during 2009 or 2010, if the home was your primary residence and if your mortgage was with one of the participating servicers, you can request to have your case examined.
Qualifying for a review, though, doesn't mean you'll qualify for compensation.
"Not all foreclosures involved errors, and not all errors involved financial injury," Ted Wartell, director of community affairs policy at the Office of the Comptroller of the Currency, said during the October conference call.
If you don't like the results of your review, there is no appeal option. But you can pursue other options if you believe you were wronged, as requesting a review will not waive your rights to future legal claims.