Will a Foreclosure Moratorium Result in Temporary Help for Distressed Home Owners?
The Attorney General of the State of Washington, and those of numerous other states, took action today regarding the current crisis in real estate foreclosures. Rob McKenna, the Washington AG, put all foreclosure trustee service companies on notice, telling them to ensure that they are following the law in each and every foreclosure case, or not pursue the foreclosure further until they can. While this does not amount to a governmentally imposed foreclosure moratorium, it may have the effect in a limited way.
Several large mortgage lenders have recently decided to voluntarily impose a moratorium on foreclosures until discrepancies in the way they are processed are resolved. Reports on problems found with recent foreclosure proceedings show that most problems are a result of the sheer volume of foreclosure activity. Bank employees signing documents by the thousands without reading them, notarizing signatures that were not witnessed, and short cuts in the legal process seem to be the most common sort of issue. The current situation will require that all foreclosure files frozen in the process be carefully reviewed. Missing document issues will need to be resolved, T’s will have to be crossed, and I’s dotted….but don’t fool your self into thinking the foreclosure will stop.
If a foreclosure moratorium is imposed, Home owners in distress can (and should) look at this as an opportunity. While the likelihood of someone keeping their home and not making payments is pretty slim, a freeze could possibly add several months or more to the time you have. If you have not tried a short sale, take this as a sign that you should try. If you have not tried to get a mortgage modification (or if you have and failed) try again. If your mortgage lender is one who has imposed a moratorium on foreclosures (such as BofA), they may become more interested in a mortgage modification instead of a foreclosure, especially since they are not doing foreclosures right now.
Are you are a home owner in trouble, don’t bet that a foreclosure moratorium to bail you out…but it will gain you some time. Take what you can get, and take advantage of the situation! If you are a homeowner not in distress, this probably means that the ups and downs of the real estate market may continue for a while. If you are a home buyer, all of this means that there probably isn’t going to be a better time to buy a home….ever again in your lifetime, and the deadline on the fire sale just got extended by of all things…a freeze on foreclosures. For More information about the foreclosure freeze, or foreclosure Moratorium, visit the Phil Sharp Homes Foreclosure Page