Foreclosure Errors Cost Banks $125,000… or $15,000… or…

Late last year, banking regulators set out to put a price on foreclosure errors for victimized homeowners. It’s going to cost banks $125,000. Or maybe $15,000. Or perhaps just $500. Pretty clear, huh? How is the actual amount determined? The regulators finally released their “framework” of possible outcomes from 13 different mortgage servicing “errors.” Each of the 13 errors has a different level of monetary compensation. So homeowners now need to know specifically how the mortgage servicer was in error, and also when in the process. As one would imagine with such a cloudy remedy, the response has been less than enthusiastic. So what egregious error earns the top $125,000 payout? One of three circumstances: active duty military who were foreclosed upon while under the protection of the Servicemembers Civil Relief Act; homeowners who ended up in foreclosure thanks to a bank’s error and those who were in trial modifications when the bank initiated foreclosure.

 

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