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Foreclosure relief on its way after feds halt probe

TimesLedger Newspapers

More than 3,000 borrowers in Queens who were in foreclosure in 2009 and 2010 may receive anywhere from a few hundred dollars to $125,000 after federal regulators cut short an investigation before fully determining the scope of possible abuses by 10 mortgage servicers.

The comptroller of the currency, who investigates institutions affiliated with the U.S. Treasury, announced last week his office had reached an $8.5 billion agreement following an investigation into the foreclosure processing practices of Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo.

Financial regulators ordered the reviews amid accusations the banks were robo-signing foreclosures without adequately verifying the paperwork.

The probe, however, was cut short due to cost overruns, and instead of compensating borrowers on a case-by-case basis the office will use what it called a “broader framework” to deliver relief more quickly.

“We have learned a great deal from the reviews that have been conducted to date. However, it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers,” Comptroller of the Currency Thomas Curry said in a statement Jan. 7. “Our new course of action will get more money to more people more quickly, and it will speed recovery in the nation’s housing markets.”

“When we began the Independent Foreclosure Review, the OCC pledged to fix what was broken, identify who was harmed, and compensate them for that injury. While today’s announcement represents a significant change in direction, it meets those original objectives by ensuring that consumers are the ones who will benefit, and that they will benefit more quickly and in a more direct manner,” he added.

The New York Times reported last week that the investigation was farmed out to contractors hired by the banks, and a critical flaw was that employees were encouraged to minimize the number of flawed foreclosures.

The comptroller’s office announced $3.3 billion will be made in the form of direct payments to eligible borrowers through a payment agent and $5.2 billion will be set aside for other assistance such as loan modifications and deficiency-judgment forgiveness for borrowers who were in foreclosure in 2009 and 2010.

According to the real estate website propertyshark.com, 2,258 residential properties in Queens were foreclosed on in 2009 and another 1,413 properties in 2010.

The years 2009 and 2010 were some of the worst for Queens homeowners. In 2008, foreclosures hit their peak at 2,359, almost four times as the next borough, Staten Island. As new regulations came into effect, foreclosure underwent a steep decline to just under 400 in 2011, but the number of delinquent mortgages continued to rise.

According to propertyshark.com, 2012 represented a seven-year low for the borough, with just 358 foreclosures, down 85 percent from the peak in 2008.

In October, the U.S. Department of Housing and Urban Development put a 90-day moratorium on foreclosures of Federal Housing Administration-insured mortgages for homes affected by Superstorm Sandy.

Reach reporter Rich Bockmann by e-mail at rbockmann@cnglocal.com or by phone at 718-260-4574.

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Noreen from Staten Island says:
It is a shame that blogs like this do not make it to print in the newspapers. I happen to live in the borough of Staten Island. My mortgage was never assigned after a mortgage banker (Somerset Mortgage Bankers, Melville, N.Y.) never sold/transferred my loan for "new" servicing rights or ownership. This delayed the first payment due on 4/1/2008 by one month on a brand new refinance. Thanks to the illegal activity of Wells Fargo, I never received a payment coupon, new loan number, or a welcome letter. On 5/1/2008 (one month later) I received a payment coupon from WFHM, the servicing division of WF with a "new" loan number on it. Technically, I should have received a payment coupon and a default letter, as the loan was already late. The following year, my payment that I thought was 15 days late in July of 2009, was submitted and I was sent a letter that my loan was 45 days in default. This started the foreclosure train rolling.

After 1 1/2 years of battle with Wells Fargo both in and out of court, my case was dismissed. However, the most inportant question I asked was presented to the GSE,Freddie Mac. When I called and submitted a request for a fraud investigation on exactly who sold this loan to them, the answer was Wells Fargo. This would not be possible because I went through a mortgage banker (warehouse lender), and not a broker. It is going on 2 1/2 years now, and the bank has changed their story, now on paper, and in writing as to who sold the loan to them and not Wells Fargo. The bank now says Somerset Mortgage Bankers sold the loan to the GSE. I asked the GSE (Freddie Mac) to confirm that Wells Fargo sold this loan to them in February 2008 in writing. This request was flatly refused, but I was told numerous times that Wells Fargo did sell this loan to them. It is most obvious that Wells Fargo sold a loan and were reimbursed for something they did not own. Bottom line, nobody sold this loan to the GSE, and if the GSE paid Wells Fargo for this loan, both Freddie Mac and Wells Fargo are trying to steal my home worth over $500,000.00 to cover their own mistake. I don't want a free home, but it is very obvious that Wells Fargo and Freddie Mac do to clear up their errors. All of this fraud was uncovered through their own stupidity and greed. I should actually be thanking them! I am currently part of the IFR process. My info was accepted in August 2012 and supposedly reviewed in November 2012. I was foreclosed upon July 13, 2010, but it was dismissed. I need any money that I receive to file criminal charges in Federal Court. Point being; if I stole my neighbors car and tried to sell it without proper ownership rights, I would be put in jail for at least a year. I am tired of hearing that nobody is responsible.
Feb. 5, 2013, 4:10 am

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