Regulators extend foreclosure review timetable

WASHINGTON Wed Feb 15, 2012 11:32am EST

WASHINGTON (Reuters) - Homeowners who believe improper foreclosure actions were taken against them in 2009 and 2010 will get more time to seek compensation from U.S. banks.

As part of an April 2011 settlement with federal bank regulators, 14 banks agreed to hire independent consultants to determine if errors or legal violations occurred in the steps they took to foreclose on a borrower in 2009 and 2010.

Homeowners -- whether they lost their homes or are still in them -- can ask the consultants to review their cases as part of this process, and on Wednesday the Office of the Comptroller of the Currency and the Federal Reserve said homeowners will have an additional 90 days to make such a request.

The original deadline of April 30 has been extended to July 31, the regulators said.

If the review finds there were problems with a foreclosure that resulted in financial harm to a homeowner then that homeowner will be eligible for compensation. The form of that compensation has not yet been determined.

Among the 14 banks taking part in the settlement are Bank of America Corp, JPMorgan Chase & Co, Citigroup Inc, Wells Fargo & Co, and Ally Financial Inc.

Last week, those same five big bank reached a $25 billion settlement with 49 states and federal agencies to resolve allegations of mortgage abuses.

That settlement requires the banks to cut mortgage debt amounts and extend $2,000 payments to borrowers who lost their homes to foreclosure.

Under the April 2011 settlement with federal bank regulators, more than 89,000 requests for a review had been made as of February 5, an OCC spokesman said.

The regulators said they hope extending the deadline will provide additional time to make homeowners aware that they can ask to have their cases reviewed.

There have been 3.2 million completed foreclosures since the financial crisis began in September 2008, according to CoreLogic, a real estate data company.

Banks and the regulators have been sending mailings to homeowners who may be eligible for the review and are also using public advertisements to alert homeowners about the review process.

(Additional reporting by Margaret Chadbourn; editing by John Wallace)