Federal regulators have been accused of letting Bank of America (BofA) be heavily involved in a so-called independent review of foreclosure cases that’s supposed to correct the bank’s mistakes.

The Office of the Comptroller of the Currency (OCC), which regulates financial institutions like BofA, began last year to evaluate millions of foreclosures by multiple banks from 2009 and 2010. The Independent Foreclosure Review was intended to keep the banks out of the decision-making process over whether homeowners should be compensated for institutional errors or illegal practices by only allowing them to provide information to an independent regulator. But the banks were allowed to choose their own regulator. Bank of America hired Promontory Financial Group, a company with which it had previously done business. No doubt Promontory would like to continue its business relationship with BofA…thus a potential conflict of interest.

When the homeowner files a complaint relating to a Bank of America foreclosure, BofA provides its version of the case to Promontory, which rejects to homeowner appeal or suggests a compensation amount. BofA is allowed to challenge the figure and Promontory may adjust it accordingly.

However, if the homeowner’s request is rejected or the homeowner objects to the amount of compensation, the homeowner is not allowed to challenge the figure. The homeowner’s only avenue for an appeal is to sue Bank of America. Given the resources available to the average foreclosed homeowner compared to the resources available to BofA, this is an unlikely avenue of appeal and one whose outcome is heavily skewed in favor of the bank.

[link to www.allgov.com]