Last week, the USA Today reported that it could take nearly a decade to clear out the more than 2 million homes that are in foreclosure or are seriously delinquent. That’s about twice as long as last year’s estimate – before the government and foreclosure defense attorneys began uncovering fraudulent paperwork and other illegal and improper bank practices that have contributed to slowing the recovery process to a crawl.
While holding banks accountable is a good thing, the delay is not good news for huge numbers of homeowners who are dealing with an upside down mortgage; in many cases they are holding on with the hopes of a market recovery, instead of strategic default or negotiating a short sale or home loan modification.
Industry watchers now believe the backlog will weigh on the real estate market for decades. In Connecticut and Maryland, for example, the turnaround could take another 20 years. In Illinois and Florida, it’s projected to take 8 to 10 years before home prices recover.
In the mean time, banks continue to trample homeowner rights in their quest for profits and federal loan modification programs have been less than successful–largely because banks would rather foreclose than work with owners. Criminal investigations in all 50 states have been launched after foreclosure defense firms revealed predatory lending practices and forged or fraudulent documents from banks in foreclosure cases from Florida to Washington State.
In some cases, banks have granted temporary modifications, only to later reject a permanent modification. Mortgage companies have then used the resulting arrears to file a foreclosure action on the homeowner! In other cases, banks have agreed to the terms of a short sale, only to file a deficiency judgment, which attempts to collect from the homeowner the balance between what was owed on the loan and what a property brings at sale. A Miami-Dade real estate attorney can help protect the rights of homeowners by negotiating away the rights of a bank to file such actions after accepting the terms of a short sale.
Banks are moving faster in states where court action isn’t required. Thankfully, attempts to remove the courts from the foreclosure process have failed in the Florida legislature.
“It’s a question of whether you rip the Band-Aid off quickly or slowly,” says Herb Blecher, of LPS Applied Analytics, which tracks mortgage data.
In addition to the USA Today story, the Miami Herald reports the process in South Florida continues to pick up steam. Filings were up 52 percent in October 2011 – nearly 10,000 foreclosures were filed in Miami and Broward counties. Most of the increase is attributed to stalled cases that are finally being put up for auction.
In the wake of the revelations about the unethical and illegal bank practices, struggling homeowners are finding the tide can be turned in their favor. Consulting with an experienced attorney can protect your rights and the future financial well-being of you and your family. In many cases, you can stay in your home throughout the foreclosure process, which can provide time rent-free to save money for a new beginning.
In other cases, you can save your home or minimize the financial consequences of a foreclosure. Those who stand and fight are often able to force the banks to the negotiating table.
Bio: Rick Neustein is an attorney at the Neustein Law Group which focuses on foreclosure defense and commercial litigation cases in South Florida.