Dear readers: It’s April Fools, and while foreclosures, short-sales, bankruptcy, and dual tracking are no laughing matter, we did want to have a little bit of fun for April Fool’s Day while also incorporating the feedback we’ve received from homeowners about their experiences trying to get a modification and their thoughts about the Independent Foreclosure Review.

This blog post is 100% fictional if you have questions about the real version of the Independent Foreclosure Review, visit our earlier blog post: Independent Foreclosure Review: Update on $3.6 Billion in Cash Payments and $5.7 Billion in Modification Assistance.”   (Spanish version and Vietnamese version)

Newsflash: Bank Regulators Ask Former Homeowners to Redesign Independent Foreclosure Review. 

According to Federal Reserve spokesperson, Sally Smith, the Federal Reserve has been holding secret meetings with homeowners and their housing counselors who dealt with foreclosures, robo-signing, and lost paperwork, and as a result of these meetings, the Federal Reserve announced changes today to the Independent Foreclosure Review.

Ms. Smith explained: “We realized this program is set out to help homeowners and yet we didn’t have them at the table when we originally designed the program, so we’re excited that their input has now been included.”

The first big change was that the consultants who originally worked on the Independent Foreclosure Review have all agreed to return the hundreds of millions of dollars they “earned,” which will increase the amount of money available for homeowners.  The second big change is that the original timeframe for eligibility (1/2009 to 12/2010) has been expanded to include anybody who had difficulty with their bank or servicer from 2006 through now.   By making the penalties continue, this will provide a large incentive for banks and servicers to improve their customer service now.

Other Changes to the Independent Foreclosure Review:

Compensation:

1) ) $1,000 per point of contact:  For each different bank or servicer representative that the homeowner spoke to while seeking a modification, they can add $1,000 onto their bill to their former bank/servicer.  There’s an extra $500 bonus for any homeowner who had to share messages between different departments at the bank that weren’t communicating with each other.   Maximum payout is $50,000, though we recognize some homeowners may have spoken to more than 50 representatives.

2) “Lost” Packages: Any homeowner who sent in multiple copies of the same package to their bank will be happy to learn that each lost package is worth $5,000.   This $5,000 will be assessed for the number of times a homeowner or housing counselor had to re-send in the same modification request.  There is a maximum of 10 times, or $50,000.

3) Improper Credit Reporting: Any homeowner whose credit was incorrectly damaged because of mistakes made by a bank or servicer will receive $5,000 for every 25 point drop they had in their credit score.  Homeowners will also receive a pro-rated refund if any subsequent credit products (like credit cards, car loans, student loans) were more expensive as a result of incorrect credit reporting information being reported by a bank or servicer.

4)  Eight Hours Or More on a File? Any housing counselor who spent more than 8 hours working on an individual homeowner’s case will be allowed to request a special one- time bonus of $1,000 from that bank or servicer.

5) CEO apologies:  The heads of all of the banks and servicers have collectively signed an apology to homeowners for the treatment they received when trying to request a modification.

6) “Time Penalties”:  Banks will be assessed time penalties in the following fashion:

A) Endless HAMP trial modification:  For each homeowner who was in a HAMP trial modification for more than 3 months, the bank will pay $5,000 per month, with a maximum of 10 months, or $50,000.

B) Long Modifications: For any modification request that took longer than 3 months, the bank will have to pay a late fee of $1,000 per month, with a maximum of 24 months, or $24,000.

C) Lost Short Sales: Each short-sale request that was not given a timely decision by a bank or servicer will result in a $5,000 penalty.

Reminder: This blog post is 100% MADE-UP, and is not true.  You can see the real version of the Independent Foreclosure Review on its website.

What would you add if you were re-designing the Independent Foreclosure Review?