Since it emerged that banks were seizing homes due to default using faulty foreclosure practices, there has been a lot of patient people wanting a resolution to the issue. Almost a year and a half ago, 50 US states announced that they were suing a long list of lenders who had taken possession of mortgaged homes using faulty paperwork. Predictably, ever since then there have been long and detailed discussions, trying to reach a settlement to keep the whole mess out of the courts.
While there are a lot of states that are willing to deal with the lenders to bring the matter to a head, it’s a few holding out that is stalling any agreement. As Bloomberg states, those states with the highest foreclosure rates are among those holding out on reaching the deal. These include Nevada (number one in foreclosure rates) and California (number three). It seems that while around 40 states are happy with the deal negotiated so far, there are around 10 who are having a hard time agreeing on minor details.
This is frustrating, not just to the states and lenders, but also to home-owners affected by the faulty foreclosures. The ongoing issue leaves a cloud over their heads after an wrenching and emotional experience.
Faulty foreclosure practices and HAMP
It seems that the lenders are willing to settle on the deal, and more than 40% of states are too – but it’s the remaining few that hold the keys to any deal. It is a mess that should have been resolved by now – and as it drags on ever longer people are rightfully starting to look at the Federal Government and wondering why they continue to sit on their hands.
The longer this drags on, the more it involves the HAMP scheme. The government cannot really expect to run a mortgage modification program with any confidence having this whole issue still hanging in the air. At some stage the Federal Government will have to step in and force the hand of the states to agree to a settlement that will finalize the whole issue once and for all.
This will be to the benefit of home owners, lenders, state governments and tax payers – all at the same time. Whatever forces the resolution, it needs to be resolved in order to provide a stable base for the real estate market generally to recover from the large downturn – as well as to give some closure to besieged and harangues home owners caught up in this debacle.