Doing the Right Thing for Struggling Homeowners

By NJToday Contributor Richard Booth

The past 4 years have been a very challenging time for American homeowners. The collapse of the housing market, unemployment and falling home values continue to cause untold damage to the American dream.

Beginning in early 2009 the U.S. Government announced the Making Home Affordable (“MHA”) program to assist homeowners struggling to make their mortgage payments. The goal was to stem the rising tide of home foreclosures by offering payment assistance and other measures through their mortgage servicers. The MHA program contains over a dozen different programs including the Home Affordable Modification Program (HAMP), Home Affordable Refinance Program (HARP) for first mortgage loans and two modification programs designed for second mortgage loans.

MHA got off on the wrong foot.

When the flood gates sprang open with consumers seeking assistance and record numbers of homes entering foreclosure, the mortgage servicers found themselves woefully unprepared. In their defense, the hundreds of program changes in the first months made matters worse for the servicers as they struggled to understand what degree of assistance they were actually able to offer. In many instances when they did offer help, they lost homeowners’ paperwork, sometimes multiple times, and left callers in telephone purgatory. Then, along came the unscrupulous home rescue firms who preyed on homeowners offering a variety of snake-oil remedies all under the guise of the MHA programs.

In April of 2011, federal bank regulators, The Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), both independent bureaus of the U.S. Treasury, the Board of Governors of the Federal Reserve System and 14 mortgage servicers including: Bank of America, JP Morgan Chase, Wells Fargo, Citibank and their affiliates entered into a consent order. It was agreed to among other things that the servicers would offer homeowners who were in foreclosure during 2009 and 2010 the ability to have their file reviewed by an independent third party for errors. The review will examine the files for errors made in the foreclosure process including legal procedure and available remedies under MHA. The specifics of the Independent Foreclosure Review and remedies for any harm caused are still being determined. Beginning in early 2012, a media campaign will commence to seek out homeowners.

Leading the list of sought-after homeowners are those who were actively serving in our nation’s armed forces. Since the early 1940’s and updated during the last decade, the Servicemembers Civil Relief Act (SCRA) protected those actively serving in the military lenders from foreclosure. It was discovered that despite this law, many active duty military had their home foreclosed upon. On July 12, 2011, a Congressional report was issued for Rep. Elijah E. Cummings and Sen. John D. Rockefeller, IV entitled Fighting on the Home front: The Growing Problem of Illegal Foreclosures.

After a great deal of bad press and hefty fines, the nation’s leading mortgage servicers are now committing a large amount of resources to see that past errors are corrected. The government agencies will remain looking over their shoulders until the foreclosure review process is complete.

What can consumers do if they feel that they were harmed by a foreclosure? Call the clearinghouse set up as part of the consent order at 1-888-952-9105. The website is

Do not delay; the deadline is April 30, 2012 to file a request form.

Richard Booth is a Certified Mortgage Banker with over 14 years of lending experience. He is the recipient of the non-profit USA Cares Mortgage Hero Award for his work with the military and has published several articles on mortgage lending issues. Booth is also a member of the New Jersey Coalition for Financial Education.