NEW YORK (CNNMoney) -- Homeowners who were victims of foreclosure abuses during 2009 and 2010 could receive more than $125,000 from lenders as part of an Independent Foreclosure Review that is being overseen by two government agencies.
The Office of the Comptroller of the Currency (OCC) and the Federal Reserve laid out the framework in which borrowers will receive compensation for a wide range of foreclosure abuses and errors that occurred as a result of robo-signing.
As part of an enforcement action by the agencies last April, 14 mortgage servicers, including Bank of America (BAC, Fortune 500), Chase (JPM, Fortune 500), Citibank (C, Fortune 500), HSBC (HBC), MetLife Bank (MET, Fortune 500), PNC Mortgage (PNC, Fortune 500) and Wells Fargo (WFC, Fortune 500), agreed to hire independent consultants to investigate foreclosure abuses and compensate those who suffered financial harm.
The review is separate from the $26 billion foreclosure abuse settlement between the nation's five largest lenders and attorneys general from 49 states and the District of Columbia. Under that deal, the banks promised to reduce the principal on loans held by underwater homeowners, refinance some mortgages to lower interest rates and compensate those who lost their homes due to improper foreclosure practices.
The Independent Foreclosure Review, which is being carried out on a federal level, has gotten far less attention. So far, only a fraction of the 4.4 million borrowers potentially eligible for review have responded to solicitation letters sent out by the banks informing them that they are eligible for a review by an independent consultant and may be compensated. As of May 31, only about 340,000 cases were slated for review, according to a progress report released Thursday by the Fed and the OCC.
As a result, the agencies have extended the deadline to apply for a review by two months to September 30 from July 31.
The foreclosure review compensates borrowers for everything from being charged the wrong fee to being wrongfully foreclosed upon. The guidance on compensation issued Thursday is meant to accomplish a couple of things, according to Bryan Hubbard, a spokesman for the OCC.
"We want to make sure that similarly situated borrowers are treated consistently by all 14 servicers and that potential applicants have a better understanding of the benefits of the program," he said.
Below are some of the compensation guidelines the agencies laid out:
Service members who lost their homes to foreclosure while on active duty: Considered a violation of the Servicemembers Civil Relief Act, service members who lost their homes while on active duty will receive the value of their home's equity at the time of foreclosure, plus $125,000.
For service members who owed $100,000 on homes worth $150,000, for example, and lost them to foreclosure abuse, the remediation will come to $175,000.
Negative equity does not count against the compensation. So, even if service members owed considerably more than their homes were worth, they will still receive the entire $125,000. For service members who were able to reverse foreclosures and reclaim homes, the compensation will be $15,000.
Borrowers who were put in foreclosure even though they were not in default: These borrowers will be compensated at the same level as service members -- $15,000 if they were able to get their homes back and $125,000, plus equity, if they lost their homes. In addition, if a foreclosure gets cancelled before it's completed, borrowers are eligible for a payment of $5,000.
Hubbard said there will likely be very few cases that fall into this category. "It's not about the number of people we help, it's about getting it right. It doesn't matter how few people are in this category if you're one of them," he said.
Borrowers who went into foreclosure due to errors after or during trial modifications: Some borrowers who received mortgage modifications had to go through a trial period first. During that time, they had to make regular payments just like they would once the modification is complete.
If a lender foreclosed on the borrower after the borrower successfully completed a trial modification or while they were in the midst of the trial period, they will receive the value of their home's equity at the time of foreclosure, plus $125,000. If they were able to get their home back, they'll get $15,000.
If the foreclosure was stopped, lenders must complete the permanent modification and pay $5,000 to borrowers. If the lender can't provide modified mortgages, the compensation rises to $35,000.
Errors and other issues with loan modification applications: If a lender mistakenly denied a modification application, failed to follow up on an application or ask the borrower to submit a modification application as required under the Home Affordable Modification Program, or didn't process the application quickly enough, then the borrower is entitled to compensation.
Compensation ranges from excess interest paid out as a result of slow handling to as much as $15,000, plus home equity, if the application errors resulted in a foreclosure.
Other errors and abuses: Compensation for servicer errors, like using the wrong interest rates on approved applications or initiating foreclosures while borrowers were protected under federal bankruptcy laws, will be determined on a case-by-case basis.
Consumer advocates complain that the settlement does far too little for too few. Bruce Marks, head of the non-profit Neighborhood Assistance Corporation of America, said that only a small fraction of borrowers will receive $125,000 payouts, while many others who lost their homes will get less than $15,000. This larger group were struggling borrowers who sought to modify their mortgages but whose applications were wrongfully turned down for one reason or another -- and ended up losing their homes.
The OCC's Hubbard, however, said the compensation guidelines are consistent with what courts would award in similar, private litigations.
For more information on the forms and for a full list of the mortgage services involved in the Independent Foreclosure Review, go to the website set up by the servicers or the Federal Reserve website. 
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