Foreclosure review debacle lines consultants’ pockets
WASHINGTON — A belated attempt by bank regulators to get compensation for homeowners who were foreclosed on by mistake turned into a debacle by the time it was shut down in February and is now becoming a scandal as more details emerge.
The Independent Foreclosure Review (IFR) was set up in 2011 to engage outside consultants to look at foreclosures taking place in 2009 and 2010 and determine where errors were made.
But last February, regulators decided after two years with only 100,000-some cases reviewed that the process was too much trouble, and opted instead for a $9.3 billion settlement with the biggest mortgage companies that awards the victims pennies on the dollar for their losses.
In all, 80% of those subject to the foreclosures covered by the agreement will get $1,000 or less, while the outside consultants who handled the review reaped a windfall of $2 billion, nearly $20,000 for each case actually reviewed.