About 1.3 million homeowners nationwide have received notification since Nov. 1 that they are eligible for a free review of their foreclosure cases as federally approved auditors comb through files for flaws.
Another 3 million homeowners are expected to get letters by the end of the year in an effort to comply with a federal order that could compensate borrowers who were financially harmed by defects in their foreclosures.
Cases are eligible for review if the foreclosure was on a primary residence in some stage of the foreclosure process during 2009 and 2010, and handled by one of 24 servicers named in the consent orders. The affected servicers can be found at independentforeclosurereview.com .
In Palm Beach County, about 51,500 foreclosures were filed in 2009 and 2010, but thousands more that were initiated in previous years could be eligible if they were still in the court system during the two-year period.
On Tuesday, the U.S. Office of the Comptroller of the Currency released a progress report on how servicers have performed in complying with the April consent orders. The orders were in response to deficiencies found during a fall 2010 review of foreclosure proceedings.
Homeowners who want their foreclosure cases reviewed must respond to the letter no later than April 30 .
Reaching eligible homeowners is a concern for regulators, who laid out a detailed plan on the efforts required to find borrowers. Non-current addresses will be run through a national change-of-address database, while returned mail will be processed through consumer information sources such as credit bureaus, public records, utilities and phone listings.
Auditors are looking for such problems as robo-signing, inaccurate fee charges and foreclosures that occurred while a homeowner was working on a loan modification. If a flaw is identified, it has to have caused a financial hardship for the homeowner for the owner to be eligible for compensation.
Still, foreclosure defense attorney Tom Ice, of Royal Palm Beach-based Ice Legal, said he recommends that homeowners request the review.
"I am interested to see what they can find."
But he's skeptical about whether reviewers will delve deep enough.
"I think they will review payment history and be checking escrow amounts, and that's all good stuff," Ice said. "But that's just one problem. The other problem, if not the bigger problem, is who owns the note."
Another unknown is whether homeowners will have to waive their rights to sue the servicer if they accept compensation for a flawed case.
Bryan Hubbard, a spokesman for the Office of the Comptroller of Currency, said case reviews have begun but none have been completed. The work is expected to continue through 2012.
The firms doing the reviews, which were revealed Tuesday, include such big names as Ernst & Young, Pricewaterhouse-Coopers and Deloitte & Touche.
Hubbard said all firms and subcontractors must be approved by the comptroller's office. According to the progress report, some firms were rejected to avoid potential conflicts of interest.
Also, servicers are prohibited from overseeing, directing or supervising any of the reviews.
"The office has stressed the importance of independence as a key requirement for the consultants and outside attorneys engaged for the review process," Tuesday's report states.
Homeowners should expect letters to differ depending on their servicer. The letters are not being released to the public because of fears they will be duplicated by scammers.
Ice tried to get copies of the letters earlier this month but was refused. He saw his first copy Tuesday when a client brought it in.
"This will definitely be an interesting chapter to watch," Ice said of the review effort.