The federal government on Tuesday began its initiative to review nearly 4.5 million foreclosure cases to determine whether mistakes in the foreclosure processes have made foreclosure victims eligible for compensation.

The foreclosure review process was established to examine the foreclosure actions of 14 mortgage servicing companies and their partners between 2009 and 2010. The review was ordered this past April when an investigation by federal banking regulators uncovered problems in the companies' processes of foreclosure and mortgage servicing.

While not all homeowners are expected to be compensated even if irregularities are found in their foreclosure case, many will receive some form of restitution, and the amounts could vary depending on how severely the procedural errors have damaged them.

Letters will be sent to all eligible homeowners by the end of the year, and they have until April 30, 2012 to request a review. The foreclosure reviews will be conducted by eight independent firms, and their decisions on the amount of restitution owed will be considered final by the government.

But consumer advocacy groups have taken issue with the proposed process, saying more transparency is needed to trust that the reviews are conducted fairly. Part of the concern of these groups is that the consultants are being paid for by the mortgage servicers themselves, causing some to wonder if the reviews will be conducted without bias.

San Diego foreclosure attorneys noted that the new program affects not only owners of foreclosed homes, but also some owners who entered the foreclosure process but were then able to bring their loans current.

Source: USA Today "Foreclosure review process affecting 4.5M consumers begins" Nov. 2, 2011