By Sarah Parr
RealtyTRAC recently reported that the total number of foreclosure-related legal filings increased 3 percent from January to February of this year. Although foreclosure activity is still down 25 percent from a year ago, the reality of distressed homeowners who are struggling to pay their mortgage still exists. One in 842 United States’ housing units faced a foreclosure filing last month.
State governments and loan servicers can relieve homeowners of the worry and anguish the threat of foreclosure causes by providing the following solutions.
Contacting a lender or loan servicer can be difficult. Borrowers frequently discuss their mortgage with many different people when they contact their loan provider, leading to mixed-up communication. Often, a homeowner must explain his or her circumstances during every phone call, or important paperwork goes missing. Some homeowners report that they have faxed the same document dozens of times to different people working for the same company. A single point of contact for each borrower would solve the problem of jumbled communication many homeowners face.
With some of the lengthiest processing periods, foreclosure documents in states that handle foreclosures solely judicially push through the courts slowly. Florida foreclosure lawyers file documents that take nearly 29 months to process, compared with the nation’s average of 13 months. This creates a buildup of cases for attorneys and courts and more ambiguity for homeowners. States that handle cases through administrative processes in addition to judicial-foreclosures see shorter processing times for foreclosure-related filings.
A few states, such as California, have passed homeowner bill of rights measures to protect homeowners and further regulate the mortgage and housing relief industry. California’s law prohibits a few practices associated with predatory lending: “dual tracking,” which is when a lender continues a foreclosure process even if the borrower is applying for a loan modification, and “robo signing,” a term describing the robotic signing and production of falsified mortgage documents. California’s law also mandates that lenders provide a single person of contact for the borrower, and gives the borrower the power to sue for significant violations of the new laws.
California has seen a 7 percent reduction in foreclosure activity since its bill of rights law went into effect on January 1. If more states passed similar laws, the U.S. could see a steady decline in foreclosures.