The Money in the OCC’s Cancelled Independent Foreclosure Review

OR… MAYBE NOT.

A little over a week ago, we all saw the news that the OCC’s Independent Foreclosure Review (“IFR”) was cancelled… or rather… “settled” for something like $8.5 billion. A lot of people wrote about how they were outraged over the whole thing, but I wasn’t… so I didn’t.

First of all, I thought it was pretty obvious that the whole idea was more than flawed from the beginning, so the fact that it was turning out to be another failed government program in response to the foreclosure crisis was hardly surprising.

And secondly, I said that before I would be willing to get upset over the IFR being cancelled, I wanted to know how much the OCC was planning on awarding someone who was underwater and delinquent even if something was found to be wrong with foreclosure process.

Well, below is the information needed to answer the question of the money that was to be involved in the OCC’s IFR. It’s the OCC’s “Financial Framework.”  It shows how much money a borrower would have gotten depending on what was uncovered about the foreclosure.

I got it from an insider, but I’ve noticed it now published on-line so it’s not a secret at this point.

Now, it’s worth mentioning that the OCC IFR and I assume the settlement that’s forthcoming won’t prevent a homeowner from pursuing other avenues such as filing their own lawsuit, but that’s just more blah, blah, blah… as far as I’m concerned.  The IFR’s FAQ says…

“… there may be some cases where a borrower believes that additional compensation is warranted. In those cases, borrowers may pursue other available legal remedies.”

 

It’s hard for me to imagine having to sue JPMorgan Chase under any circumstances.  I don’t know what it would cost, but I don’t think it’d be inexpensive.  But, if I just lost my home to foreclosure… after not being able to make my mortgage payments for a couple years… well, I just can’t imagine being able to come with the money needed to sue one of the world’s largest banks for even the most egregious of offenses.  I mean, maybe if I had truly been current when I lost my home, or maybe if the foreclosure occurred when I was on active duty fighting in Iraq, but  in either of those instances chances are I’d already be suing or have already sued… and won.

 
Suing for something like a robo-signer signing an Assignment of Deed of Trust, or for being improperly denied for a loan modification?   I don’t know… would I really be willing or able come up with the tens of thousands it would take to bring such a suit that would take years and that I very well might not win?  I just don’t know… I really do not know.

So, it would seem that for the vast majority of people who went through the foreclosure process in 2009 and 2010, the OCC IFR will be “it” as far as “direct remediation for wrongdoing” is concerned.  But, since only 10 percent (approximately) of those that were eligible for the review bothered submitting their case to the OCC IFR, that’s the population with the potential to lose something as a result of the program’s cancellation.

Roughly, we’re talking about 450,000 people.  Keep in mind, as you’re reading the “Financial Framework” chart below, that if each had received $2,000… the total would only be $1.35 billion… if each had received $4,000 then the total would have only been $2.7 billion… if each got $8,000, then it would have totaled $5.4 billion.  But now, under the settlement approach, something close to 4 million homeowners are set to receive some sort of financial remediation, according to USA Today.

“More than 3.8 million borrowers whose home loans at these 10 banks were foreclosed on in 2009 and 2010 will receive some compensation in a timely manner, regulators said.”

 

OCC Independent Foreclosure Review "Financial Framework" from Martin Andelman