We hear news stories about loan servicers stopping or “freezing” foreclosures.
Why are they doing this, and what does it mean to you?
Due to the growing volume of foreclosures that the largest loan servicers (typically large banks) are dealing with, they found some creative ways to be more efficient.
The process of completing a foreclosure can be time consuming and very expensive for a loan servicer, especially in the 23 states that require judicial foreclosures (Arizona does not require judicial foreclosures).
To save time and manpower, loan servicers had employees sign foreclosure documents and affidavits stating they read the documents without actually taking the time to read them.
There were also “robo-signers” that created computer generated signatures on these documents.
When this practice came to light, attorneys drooled at the prospect of class action lawsuits on behalf of improperly foreclosed homeowners against “evil” banks.
In response, loan servicers stopped foreclosures in the 23 judicial foreclosure states.
In addition, the largest loan servicer – Bank of America – stopped all foreclosures across the country for a period of time. B of A has since reviewed their foreclosure practices and has re-started foreclosures.
Other servicers have followed. Here in Arizona, all the major loan servicers are actively foreclosing homes.
However due to the mammoth number of foreclosures, the process may take several months and in some cases over a year.
Foreclosures are a considered to be a negative factor in our real estate market because they contribute to a decline in values by adding more homes to the available inventory.
But they are actually very important to the recovery of the market.
WHY?
Foreclosures take a property that was not affordable for a person or family and resets the property to become affordable for another person or family.
It takes time, but the process of taking unaffordable homes and converting them to affordable homes is the bad-tasting medicine that will cure our ailing housing market.
If you are in a position to purchase a home to live in or as an investment, buying today at “reset” prices is a smart decision.
If you have any questions about financing a home, interest rates, how to repair your credit score etc., please feel free to give Chris a call.
Chris Mozilo NMLS# 183726; AZ LO-0912308; BKBR-0115591; CA-DOC 183726
