WASHINGTON (7/8/14)--The Federal Reserve Board of Governors published a report on the Independent Foreclosure Review (IFR) and its replacement payment agreement Monday. The agreement requires large mortgage servicers to provide about $10 billion in payments to eligible borrowers and in other foreclosure prevention assistance.
The Fed and the Office of the Comptroller of the Currency issued enforcement actions against 16 mortgage loan servicers between April 2011 and April 2012. These actions were a result of alleged deficient practices in mortgage loan servicing and foreclosure processing. The actions required correction of servicing practices, and the servicers had to hire independent consultants to determine if borrowers suffered financial injury and were eligible for financial remediation.
The report provides information on the process for the review of the foreclosure files during the IFR and file review results, including servicer error rates during the IFR, up to the time the IFR was replaced. The report also contains updated information on direct borrower payments and discusses the Federal Reserve's ongoing supervision of corrective actions.
According to the report, 50.5% of errors found were classified as "general errors," while 9.3% are related to the Servicemembers Civil Relief Act, 9.1% were erroneous denials of modifications, 8.9% were related to bankruptcy and 8.5% were as a result of the servicer having failed to provide legally sufficient notice.
Fifteen of the mortgage servicers entered into the payment agreement to provide $3.9 billion in direct cash payments to borrowers, as well as another $6.1 billion in foreclosure prevention assistance, which includes loan modifications and forgiveness of delinquency judgments.
According to a statement from the Fed, the payment agreement "provides the greatest benefit to consumers in a timelier manner than would have occurred under the IFR and ensures that servicers cannot ask or require borrowers to waive any legal claims against their servicer as a condition of payment."
Use the resource link below to view the report in its entirety.