The Foreclosure Mess
October 12, 2010
There has been so much in the news media about foreclosures and the processes that result in borrowers losing their homes. Accusations have been made that lenders or their servicers have improperly processed the paper work that is necessary to be filed in order for a foreclosure sale to take place.
I have had a number of questions about whether sales in our area have been part of the mismanaged foreclosure procedure. basically, as I have been able to ascertain, the problems have occurred in states that use judicial foreclosures rather than trustees sales. California uses Trust deeds with a trustee given the power of sale in the event of the borrower failing to make the payments on the loan.
Many states use a mortgage document which involve only the lender and the borrower. For the lender to foreclose, generally the lender must file a complaint with the courts and may record a Lis Pendens. The complaint will state what the debt is and why the default should allow the lender to foreclose and to take the property given as security for the loan. If the court finds the debt valid, and in default, the court will issue a judgment for the total amount owed plus the costs of the foreclosure process. After the judgment has been entered, a writ will be issued by the court authorizing a sheriff's sale. Unlike trustee's sales in California, no specific time frames seem to be part of this judicial process. Some of the accusations against lenders is that they rushed through this process and failed to properly inform the borrower of the borrower's rights.
The foreclosure process in California begins with the lender notifying the trustee who holds the power of sale. The trustee then prepares a Notice of Default which is sent to the borrower and sometimes posted on the property. The Notice of Default is recorded in the county where the property is located. The borrower then has 90 days to make the loan current or perhaps work out a loan modification or a short sale. After the 90 day period has passed, the lender may send the borrower a Notice of Trustees sale. This document is also recorded in the county where the property is located. The Notice of Trustees sale must be published 3 times in a local newspaper over a 21 day period. If no modification or short sale has occurred, the lender can then proceed to auction the property at the location named in the published Notice of Trustees Sale. This process takes a minimum of 121 days. It is fully described in the statutes of the state of California.
The Bank of America has decided to put a moratorium on their foreclosures in all 50 states, so California's foreclosures are on hold for the time being. Hopefully during this hiatus, the Bank will re examine the loan modification process as well as the timeliness of the short sale process. Loan modifications could keep borrowers in their homes. Both loan modifications and short sales seemingly reduce the loss that lenders take at the auction on the court house steps. Making these processes efficient would enable the Bank to get through this difficult period of adjustment of property values. (This is just my editorial comment.)
There has been so much in the news media about foreclosures and the processes that result in borrowers losing their homes. Accusations have been made that lenders or their servicers have improperly processed the paper work that is necessary to be filed in order for a foreclosure sale to take place.
I have had a number of questions about whether sales in our area have been part of the mismanaged foreclosure procedure. basically, as I have been able to ascertain, the problems have occurred in states that use judicial foreclosures rather than trustees sales. California uses Trust deeds with a trustee given the power of sale in the event of the borrower failing to make the payments on the loan.
Many states use a mortgage document which involve only the lender and the borrower. For the lender to foreclose, generally the lender must file a complaint with the courts and may record a Lis Pendens. The complaint will state what the debt is and why the default should allow the lender to foreclose and to take the property given as security for the loan. If the court finds the debt valid, and in default, the court will issue a judgment for the total amount owed plus the costs of the foreclosure process. After the judgment has been entered, a writ will be issued by the court authorizing a sheriff's sale. Unlike trustee's sales in California, no specific time frames seem to be part of this judicial process. Some of the accusations against lenders is that they rushed through this process and failed to properly inform the borrower of the borrower's rights.
The foreclosure process in California begins with the lender notifying the trustee who holds the power of sale. The trustee then prepares a Notice of Default which is sent to the borrower and sometimes posted on the property. The Notice of Default is recorded in the county where the property is located. The borrower then has 90 days to make the loan current or perhaps work out a loan modification or a short sale. After the 90 day period has passed, the lender may send the borrower a Notice of Trustees sale. This document is also recorded in the county where the property is located. The Notice of Trustees sale must be published 3 times in a local newspaper over a 21 day period. If no modification or short sale has occurred, the lender can then proceed to auction the property at the location named in the published Notice of Trustees Sale. This process takes a minimum of 121 days. It is fully described in the statutes of the state of California.
The Bank of America has decided to put a moratorium on their foreclosures in all 50 states, so California's foreclosures are on hold for the time being. Hopefully during this hiatus, the Bank will re examine the loan modification process as well as the timeliness of the short sale process. Loan modifications could keep borrowers in their homes. Both loan modifications and short sales seemingly reduce the loss that lenders take at the auction on the court house steps. Making these processes efficient would enable the Bank to get through this difficult period of adjustment of property values. (This is just my editorial comment.)
posted by shirley harry at 9:03 AM
1 Comments:
Avoiding foreclosure is a sure way to prolong the depression. Prices are correct as well as bank corrupt practices, leaving the owners in their homes without making mortgage payments does not help anyone. What should be improved as banks offer short sales and the government to stop regulating everything in the country, so you can let the market fix the economy.
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