3 Ways Foreclosures Can Be Handled Better in America

Recent data from RealtyTRAC shows that the overall number of foreclosure filings has decreased in recent months, with a 3 percent decrease from 2011 and a 36 percent decrease from when foreclosures peaked in 2010. This data presents some positivity in the aftermath of the homeowner crisis; however, the reality of troubled homeowners who cannot afford their mortgages still exists.

State governments and loan providers can take certain steps to relieve homeowners of the anxiety and anguish the threat of foreclosure causes.

Communication made easier

Borrowers often discuss their loan with many different, unconnected people when they contact their loan provider, leading to confusion and unsystematic communication. The homeowner must explain his or her situation during every phone call, and paperwork is frequently unaccounted for. A single contact for each borrower would lead to organized and proper communication for the homeowner.

A faster process

States that handle foreclosures solely judicially have some of the longest processing periods for any type of foreclosure filing.  Compared with the nation’s average of 13 months, Florida foreclosure defense filings take nearly 29 months to process, creating a buildup of cases for attorneys and courts and more uncertainty for homeowners. Other states handle cases through administrative processes in addition to judicial-foreclosures, and the processing time for foreclosure-related documents is much shorter.

Homeowner bill of rights

A few states, such as California, have enacted a bill of rights measure meant to protect homeowners and further regulate the mortgage and housing industry. The 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 used by consumer advocates to describe the robotic signing and production of fraudulent mortgage documents. California’s law also orders that lenders provide a single point of contact for the borrower, and gives the borrower the power to sue lenders 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 adopted similar methods, the foreclosure rates in the United States would drop even more rapidly.