The Oak Park mortgage foreclosure defense attorneys at the Emerson Firm recently explained that federal regulators plan to unveil a new complaint procedure for homeowners victimized by our country’s flawed foreclosure process. According to a report in the Chicago Tribune, the complaint procedure is the “first tangible action” toward addressing the many errors revealed last year made by banks during the foreclosure process. Such mistakes were numerous and widespread, leading regulators, the legal profession, and Chicago-area homeowners to question the efficacy of some of the country’s largest mortgage lending companies. Yet as more information has come to light about the new complaint procedure, several important flaws with the plan have been exposed.
The purpose of the new complaint procedure is to address a wide range of fraudulent mortgage foreclosure practices while also providing some monetary relief to aggrieved homeowners. This week, mortgage servicers began mailing out letters to invite potentially aggrieved borrowers to submit their cases for a free review by independent consultants. The lenders will fund the reviews. If independent consultants find that a homeowner was financially harmed by fraudulent lending practices, that borrower may be eligible for compensation.
But the new procedure already has some serious flaws. Consumer advocates and others have criticized the federal regulators involved in the new plan, according to the Chicago Tribune.
Our Chicago mortgage foreclosure lawyers also believe that the new complaint procedure has important flaws because the plan is limited in its scope and could result in some homeowners giving up their rights without knowing the consequences of doing so. Some of the plan’s most concerning flaws include:
- Limited scope: Only people who were in foreclosure in 2009 and 2010 will receive letters from mortgage servicers. Our attorneys at the Emerson Firm know that homeowners with valid claims may not be covered under the new procedure and could still benefit from speaking with a legal professional about the viability of their claims.
- Too Much Influence from Banks and Lenders: One law professor has expressed concern that federal regulators are more worried about the “‘banks’ bottom lines than whether banks follow all the rules.’” If true, this could be a serious blow to consumers who have already suffered due to the actions of greedy banks and lending companies.
- Lack of Definition and Transparency: Most importantly, the new complaint procedure is still underdeveloped, even though mortgage servicers are already sending out letters asking borrowers to send in their claims. Consumer advocates have criticized regulators for their lack of transparency, raising concerns that many eligible borrowers may not be reached. Also, regulators have not released a system for determining how much to compensate homeowners whose homes were improperly foreclosed upon. Therefore, it could be difficult for a homeowner to dispute whether he or she has been compensated fairly. Finally, it is not clear whether borrowers will have to give up their rights to further claims under Illinois foreclosure law if they receive compensation under the complaint system. This means that some borrowers could actually be undercompensated.
The new complaint procedure is an initial step toward getting wronged Chicagoland homeowners the compensation they deserve, but it may not be the best solution for all homeowners. If you believe you were a victim of fraudulent mortgage foreclosure practices, please contact a qualified legal professional. For a confidential consultation with a legal professional at the Emerson Law Firm, please call our office at 708-660-9190 or visit us online.
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