CNBC’s RealtyCheck Blog, which covers national real estate news, recently published an article titled “Foreclosure Delays Plague Housing Recovery,” which discussed the delays banks are facing in foreclosing on homes. The article basically talks about the backlog of foreclosed houses the banks are accumulating and how this is hurting the recovery of the housing market. But the author also discussed how long it takes banks to foreclose on homes. For example, in New York and New Jersey, it takes more than 900 days to get through the foreclosure process from start to finish, in Florida 619 days, and in California 330 days, according to RealtyTrac.
I’m a Texas foreclosure defense lawyer, not New York or New Jersey, but I’m certainly not seeing a 900 day delays out of banks foreclosing on properties in Texas. To the contrary, I’m seeing banks move swiftly, whether it is a judicial foreclosure (most common for HELOC loans) or non-judicial foreclosure. And I’m seeing continued sloppiness out of lenders in their foreclosure proceedings. In many instances, they are completely ignoring clear statutory requirements.
However, if this article is correct that foreclosures are moving slower than ever, I consider that to be a very good thing.
Why? Because foreclosures are bad for homeowners, communities, and banks. Nobody wins when the bank takes a home.
Delays in foreclosures, for whatever reason, are a good thing when they give the parties a chance to step back and try to work out an arrangement that keeps the homeowner in their home. This keeps a family from being displaced and, from the bank’s perspective, it keeps up a stream of payments (after all, they’re in the lending business, not the real estate business). The process works best when the bank works in good faith with the homeowner to come up with a modification that the homeowner can afford.
Unfortunately, I’ve seen too many examples of banks not working in good faith. In one very troubling example, a bank told a homeowner to complete a modification application within 30 days. These homeowners then got a notice of foreclosure sale in less than 30 days. Had they taken the bank at its word, their home would have been sold on the courthouse steps despite being in the modification process.
Delays in foreclosures may or may not be good for the macroeconomics of the housing industry. I’m not an economist, and my focus isn’t on the big picture. I’m a foreclosure defense lawyer, and my focus is on my clients’ situations, and getting a fair deal for them. But this much I do know–delays in foreclosures usually help the system to run more justly. Delays prevent lenders from quickly running over homeowners with no regard to their rights. Delays prevent banks from blindly relying on robosigned documents. And delays can sometimes be the difference between having a family put out on the street by a constable (literally) or having an orderly winding down of a loan.