Foreclosure Task Force Makes Recommendations
On November 24, the Albuquerque Journal published an article discussing the New Mexico Legislature created Foreclosure Process Task Force and the recommendations listed in its recently issued final report.
Foreclosure Task Force Makes Recommendations
Better communication between lender and homeowner is a theme in recommendations by the Foreclosure Process Task Force to fix the way delinquent mortgages are handled in the aftermath of the housing collapse.
Describing the collapse as a “massive servicing mess,” task force chair Diana Dorn-Jones, executive director of the United South Broadway Corp., said Wall Street banks service 70 percent of the outstanding mortgages in New Mexico and regularly fail to communicate in good faith with homeowners.
“They are losing paperwork, mis-posting payments and failing to provide a single point of contact for a homeowner to negotiate with,” she said in an email. “The task force was formed to address these problems.”
The task force, created by the state Legislature this year, recently released its recommendations. It favors keeping New Mexico’s current system of using state district courts to process foreclosures, but recrommends added procedures and protocols to improve the odds that delinquent homeowners might find a way to keep their homes.
Key elements include a state-imposed requirement that a lenders and loan-servicing companies have a “single point of contact” to help a delinquent homeowner through “loss mitigation,” which involves ways to lessen the lender’s financial loss from a bad home loan. For example, a short sale is a loss-mitigation strategy.
Another key element is to make mediation, currently available in two district courts, available everywhere in the state.
Sen. Michael Padilla, D-Albuquerque, is working on a bill, based on the committee recommendations, to introduce in the upcoming Jan. 21-Feb. 20 legislative session.
Recommendations include a ban on robo-signing, which happens when lenders mass-produce foreclosure actions with little or no legal oversight. The practice of robo-signing was exposed in late 2010, which was the peak year of the mortgage meltdown, creating a national scandal.
A practice called “dual tracking” also would be banned. This occurs when a lender negotiates a mortgage modification with a homeowner while simultaneously filing a foreclosure action against the same homeowner.
Other recommendations include providing the means to fast-track foreclosures on abandoned properties and requiring a notice to the local government when a foreclosure has occurred.
Foreclosure activity in the Albuquerque metro area remains at a heightened level. RealtyTrac reported 1,177 homes somewhere in the foreclosure process in the third quarter, down by half from 2,350 in the third quarter of 2010 but three times the pre-collapse level of 372 homes in the third quarter of 2007.
“The problem is urgent, as we expect foreclosures to spike in the coming year, due to re-sets on home equity loans and a high inventory of underwater properties, which homeowners can’t sell when they can no longer afford them,” Dorn-Jones said in her email.
“There are more than 8,000 underwater homes in the state, most in Albuquerque. There are 3,500 homes actually in foreclosure right now. Combined, that is nearly 7 percent of all mortgage loans in the state.
“We see more than a thousand clients a year who are delinquent or in foreclosure due to a temporary financial crisis. We deal with bank violations and substandard servicing every day. It takes many months or years for these banks to process a simple loan modification that should take 30-60 days.
“Scores of homeowners in New Mexico who want to work out a plan to stay and pay their mortgages are being needlessly evicted. Out-of-touch, out-of-state banks are walking away from reasonable offers for short sales and deeds in lieu of foreclosure, leaving vacancies and vandalism in their wake.
“Our most important recommendation is to clarify New Mexico homeowners’ right to a day in court so they won’t lose their homes due to negligence and incompetence by mortgage servicers.”
Please click here to view the article online.
Please click here to view the Foreclosure Process Task Force Recommendations Final Report.
Please click here to view the Foreclosure Process Task Force July Update.
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally.