Foreclosures have been trending downward in the U.S. for the past few years, with many homeowners working with lenders on alternative repayment plans in order to keep their houses. It appears that foreclosures are now trending upward again, but several developments in real estate law are changing the game. These changes may actually benefit people whose mortgages are in default.
When it comes to foreclosure law, time may be on the homeowners' side.
In a growing number of foreclosure cases, lenders have exceeded states' statute of limitations. Some states allow banks and mortgage holders 5 years or more to bring their claims to court, but with some mortgages sold and resold to so many interests, it is often difficult to determine who actually owns the debt.
This is working in homeowners' favor. People who haven't paid a mortgage in years are now finding their huge home loans dismissed, as lenders can't or won't defend their claims in a timely manner. As expected, lenders are arguing that this is unfair, with some claiming that the statute of limitations begins each time a payment is missed.
The Florida Supreme Court will soon hear arguments from both sides, and it will be interesting to see what rulings are issued as a result. In the mean time, some homeowners in default are now being absolved of responsibility for hundreds of thousands in mortgage debt, and are keeping their homes free and clear from any further foreclosure threats.
New York's foreclosure process should be reformed soon.
The head of New York State's Financial Services Department, Benjamin Lawsky, recently called the state's foreclosure process "broken" and offered solutions to fix the mess. Lawsky called out the incredible delays in scheduling settlement hearings as one of the chief causes of the mess. When cases drag on, homeowners have more payments, interest, and fees added to what they already owe.
Lawsky says that lenders and servicers, who continue to stall settlement hearings for months, should have to pay the costs of those payments, interest, and fees, since they should not be allowed to profit off their own delay tactics. Forcing lenders to act in good faith should streamline the foreclosure process, which is glutting the courts, using scant local resources to police abandoned properties, and depressing the overall housing market. He says the focus of the courts should be to protect homeowners, and that those drafting new rules should work closely with consumer groups to be sure borrowers' rights are made the top priority.
If you're a homeowner in default on a mortgage, you need to contact a real estate attorney like Michael Adler immediately. They will advise you on the steps you need to take in order to have the best chances of keeping your home. Many homeowners feel ashamed or afraid and fail to act in time to save their homes, but there's no need to panic. A competent real estate attorney will represent your interests in court, and is your best shot at staying in your home despite your past missed payments.