MELISSA BLOCK, HOST:
This is ALL THINGS CONSIDERED, from NPR News. I'm Melissa Block.
AUDIE CORNISH, HOST:
And I'm Audie Cornish.
For more than six months now, government regulators and banks have had a standing offer to nearly four-and-a-half million homeowners facing foreclosure. The offer is this: to review, free of charge, their foreclosure case for errors or misrepresentations by the bank. Homeowners stand to collect as much as $100,000 if errors are found, yet NPR's Yuki Noguchi reports that so far, only a tiny percentage of those eligible have signed up.
YUKI NOGUCHI, BYLINE: This all began with the so-called robo-signing scandal. Two years ago, banks admitted mishandling some foreclosure documents. Some borrowers may have wrongfully lost their homes - probably relatively few, although the real number has never been tallied. The scandal exposed systemic problems in the foreclosure process. One outcome was that the federal bank regulators got 14 mortgage companies to establish what's called the Independent Foreclosure Review. At last count, 165,000 - which is less than 4 percent of those eligible - have applied.
Here's Housing Secretary Shaun Donovan in a speech last month.
SECRETARY SHAUN DONOVAN: I am concerned that not enough folks have signed up, and that we're going to waste that opportunity.
NOGUCHI: The review costs homeowners nothing. The original deadline of April 30th has since been extended to the end of July. And Donovan says it's the first real opportunity for most troubled homeowners to get an independent read on whether their case was or is being handled appropriately.
John Taylor is CEO of the National Community Reinvestment Coalition, which advocates for homeowners. He says it's no surprise consumers haven't responded in droves.
JOHN TAYLOR: Consumers are tired of listening to folks who are promising them that they'll help them, and all they do is charge fees. You know, there are tons of scammers out there.
NOGUCHI: Taylor says, like so many other things having to do with foreclosures, this review is fraught with challenges and complications. He says most borrowers avoid direct mail, assuming they still even live at their old address. The official website, Taylor says, looks untrustworthy. It bears no official government logos. And it took the banks more than six months to send the letters to those who qualified, giving homeowners less time to respond.
TAYLOR: And it doesn't really connote a genuine commitment to really helping the amount of people who could have been and may have been abused in this process.
BRIAN HUBBARD: The response rate really is not our focus.
NOGUCHI: Bryan Hubbard is a spokesman for the Office of the Comptroller of the Currency, one of the federal agencies administering the program. Hubbard says the government cannot force people to respond.
HUBBARD: It's always a risk that people will ignore mailings, but that's one of the reasons we required advertising. It's one of the reasons why we're doing public service announcements. And it's one of the reasons we're doing interviews like this.
NOGUCHI: The marketing effort, paid for by the banks, includes three rounds of print advertising in different languages. Separately, the government ran public service announcements in small publications and on 6,500 radio stations. Hubbard says some homeowners' cases may be reviewed, even if they don't apply. A sample of foreclosure cases are being pulled from banks' records, then scanned for mistakes.
Paul Leonard is a senior vice president at the Financial Services Roundtable, which represents the lenders. He says cynics might think the banks have little incentive to get the word out, but denies this is the case.
PAUL LEONARD: Virtually everyone involved in this wants to do it right.
NOGUCHI: In the coming weeks, regulators will release guidelines for how much homeowners with legitimate grievances should receive. Restitution payments will range from several hundred dollars to more than $100,000 for the gravest errors. The funds are separate from the $25 billion national bank settlement announced earlier this year.
Yuki Noguchi, NPR News, Washington.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.