More than 4-million former homeowners whose homes may have been foreclosed illegally by the nation’s largest banks have received letters from the U.S. government asking them if they would like their foreclosures to be reviewed. But so disillusioned by the banking industry and their own situations, the over-whelming majority have failed to reply for aid. Only about 165,000 have so far.
The low response rate, representing about 4% of the 4.1 million who received letters for the free reviews, paints a disturbing picture of the enormous series of emotions that come with being foreclosed. Job losses, adjustable rate mortgages that became too expensive to afford and a multitude of other issues surround the nation’s foreclosure crisis.
The reviews are part of a nationwide settlement with the country’s 14 largest banks and mortgage servicing companies in its $25 billion settlement over foreclosure abuses. The response rate was so low that a second mailing will be sent out in July, informing former mortgage holders of the July 31st deadline to apply for the program.
Homeowners who had a foreclosure in process in 2009 and 2010 on their primary residence may apply for the program, which is designed to pay restitution to homeowners who were wrongly foreclosed. Pay-outs are scheduled to run from a few hundred dollars up to $100,000.
Those who had rental properties that were foreclosed are not included in the program and must seek recourse by filing lawsuits in court against their lenders and mortgage servicing companies, including Bank of America, JP Morgan Chase, Citibank and Wells Fargo.
Consumer advocates for the former homeowners criticize the program’s efforts, saying they sent out the first mailing in envelopes that resembled mortgage refinancing solicitations, which are commonly thrown in the garbage before being opened.
The deadline for applying for the program comes just as the foreclosure crisis appears to be improving, reaching a five year low in April. About 1.4 million homes were in the national foreclosure pipeline as of the end of April compared to 1.5 million a year earlier, according to CoreLogic.
“There were more than 830,000 completed foreclosures over the past year or, in other words, one completed foreclosure for every 622 mortgaged homes,” said Mark Fleming, chief economist for CoreLogic. “Non-judicial foreclosure markets, like Nevada, Arizona and California, completed two and a half times as many foreclosures over the past year as judicial foreclosure states.”
Nearly half of all foreclosures were in five states over the past 12 months, with California leading the way at 142,000. Florida placed second (92,000), followed by Michigan (60,000), Texas (58,000) and Georgia (57,000). The five accounted for 48.8% of all completed foreclosures across the nation.