Foreclosures – Will the Tidal Wave Be Staunched?

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January 18, 2011; Source: Baltimore Sun | Most people expect an enormous increase in foreclosures this year as a result of the backlog caused by the “robo-signing” snafu, but it appears that nonprofits and lawmakers in some areas are working hard to forestall what could emerge as a crisis of unprecedented proportions.

In Maryland, the nonprofit Civil Justice filed a class action suit to block foreclosures on homes where potentially defective document signing procedures were used. After the suit was filed GMAC Mortgage dropped 250 foreclosure cases even while it asserted that the decision was not related to Civil Justice’s case.

Still, as the Baltimore Sun article linked to above points out, GMAC has not dropped cases en masse anywhere else. Civil Justice believes the number of cases effected by GMAC to be closer to 1,000 but it is pleased with the results to date. Anthony DePastina, Civil Justice's litigation attorney said, "The most important thing is that we've resolved this . . . They've agreed to dismiss these cases, and Maryland homeowners have another chance now. And hopefully other banks will do the same."

In Massachusetts, nonprofits and lawmakers are trying to knit together a set of new laws that would slow the flow of foreclosures there. More than 20,000 homes have been lost to foreclosure over the past two years. Secretary of State William Gavin has proposed a measure that would require judicial approval of foreclosures, a current requirement in 23 states.

Another bill is expected to be filed that would require the lender and owner to sit down with a third party mediator. This is supposed to bolster a 2010 law that requires lenders to wait 150 days to foreclose if they do not engage in negotiations with an owner.

NPQ would be interested to hear about other measures being taken locally to prevent foreclosures. Please tell us what you are seeing.—Ruth McCambridge

  • Cynthia Shaffer Joye

    I am seeing many clients who may qualify for the Making Home Affordable program, but they 1. do not understand the difference between a home modification loan and a refinance.
    2. Those who attempt to get into this program often give up because they cannot get through to the lender via phone.
    3. Many clients get into this program, but the lender does not send out documents in a timely manner, and they lose clients paperwork.
    4. This process is taking a year or more to complete, despite publicity that states that you only need to make 3 trial payments.
    5. Despite clients being in this program, lenders are still sending out foreclosure notices – even though they cannot forclose as long as client is in the Making Home Affrodable Program.

  • marva Lightbourne

    … thanking you for this valuable info. I was rejected from the HAMP in 09/10 after 6-7 months of haggling back /forward my lender ( HELLS FARGO) even thur NACA wouldn’t give me a reduced principtal presently 6 %.. I was employed then ( as a R.N.) & is presently semi-retired (.. no Jobs, even for nurses )I also was current on my mortgage, now with all this I am behind.. they put me in a forebearance plan until this april..this is nerve wrecking & a real mess !!!.. thank you.. marva