Do State Laws Contribute to Foreclosure Problems?
Some of the issues with home mortgage modification and with foreclosure relief, stem from state laws. In some cases, state laws can make a bad situation even worse. Real Estate Pro Articles points this out about some of the foreclosure laws that could compound the foreclosure situation:
One of these obsolete laws is the fast-track foreclosure law, which give mortgage lenders the right to force out defaulting homeowners of their homes and then sell the homes immediately through auctions even without filing foreclosure notices with the courts. The homeowners have the right to question the lenders’ actions, but lack funds to pursue their claims. This law is in effect in 30 U.S. states and in the District of Columbia, hastening the rise in foreclosures by state.
The third factor is the lack of law requiring lenders to find at least one alternative before proceeding with a foreclosure. With the exception of only Connecticut and California, all states allow mortgage firms to foreclose defaulting loans immediately without exploring ways with borrowers how they can save their homes. Naturally, increased foreclosures by state is the result of this factor.
Next factor is the right of the lender to disregard last-minute efforts to pay past dues, penalties and interests. The lender can go ahead with the foreclosure and sale of a home even if the borrower provides the money to update payments. This is in effect in 29 states, again another factor aggravating foreclosures by state.
You can see how such practices, in a majority of states, don’t offer much room to improve the situation. Mortgage lenders, of course, don’t have to follow these practices, though, and in many cases they are starting to change the way they do things. Efforts like the foreclosure prevention plan from Barack Obama, as well as the specter of bankruptcy judges who might be able to force loan modification, may just give mortgage lenders the push they need to stop counterproductive practices.
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