Well over 4 million homeowners affected by the foreclosure crisis are eligible for an independent review of their cases--but only a small percentage of them have requested one through a recently available federal program, and the deadline to do so is looming.
The Independent Foreclosure Review allows eligible current and former homeowners to have their foreclosure files reviewed by independent consultants. Homeowners who were financially harmed by abuses or errors of their mortgage servicers will be eligible for compensation.
As of September 2012, only 18 percent of eligible homeowners in California had responded to the mailing about the review, which is run by the Federal Reserve Bank and the office of the Comptroller of the Currency. Nationally, the response rate is only 7 percent. The deadline to request a review is Dec. 31.
"The response rate has been incredibly low compared to the number of homeowners who may have been affected," says Maeve Elise Brown, executive director of Housing and Economic Rights Advocates. She spoke at a recent briefing for ethnic media hosted by New America Media with support from the San Francisco Foundation, intended to raise awareness about the Independent Foreclosure Review program.
"There was almost no outreach to people of color or immigrants," says Brown.
Lena Robinson, a regional manager of the Federal Reserve Bank of San Francisco, says that the review is particularly focused on increasing the number of African American and Asian American responders.
Mailings about the program were sent out in November 2011. However, many homeowners were suspicious of the mailing and dismissed it as a mortgage scam.
Additionally, despite the Federal Reserve Bank's intention to reach out to Asian American homeowners, the mailings were only sent in English and Spanish (with a note about where to find other translations).
Cheyenne Martinez-Boyette of the Mission Economic Development Agency (MEDA) says that the foreclosure crisis "has impacted the Latino community disproportionately," which he says represents almost 48 percent of all foreclosures.
Etelvina Reyes, a San Francisco Bay Area homeowner, had lost her job and was going through a divorce when she got behind on her mortgage payments. She first approached a third party that promised to help her modify her home loan with her bank. The effort ultimately failed, though she was still charged a fee. She then tried to get a loan modification directly through her lender, Citibank, which granted her a trial modification.
One day she went to the bank to make a mortgage payment. "They said, 'Why are you paying the mortgage? You are no longer the owner.' The bank was now the owner," says Reyes. "That was the worst day of my life."
Reyes was likely a victim of "dual-tracking"-a practice in which banks try to foreclose on homeowners before giving a decision on a loan modification. The practice is set to be outlawed in California next year. She went to MEDA for help, and the organization was able to assist her in rescinding the foreclosure.
Reyes recently requested a review through the Independent Foreclosure Review, and could be eligible for compensation, if it's found that she was wrongfully foreclosed upon.