Unresolved foreclosure issues a problem for many New Yorkers

March 26, 2014

Unresolved foreclosure issues a problem for many New Yorkers

Article provided by The Law Offices of Allison B. Crain & Associates
Visit us at http://www.crainlaw.com

New York ranks third in the nation in the number of homeowners delinquent on their mortgages or in foreclosure, the Mortgage Bankers Association recently reported. In 2013, the number of foreclosures reached a three-year high in the state. Experts speculate that the number of high foreclosures is partially due to a still-sluggish local economy. While the unemployment rate is lower than it has been since the end of the Great Recession, many jobs are lower-paying and the unemployment rate is still higher than it was before 2008.

Delays in processing foreclosures

Banks in New York have fallen behind on processing delinquent loans, creating a backlog that has let some homeowners avoid making loan payments for years.

"Loans that were made pre-crisis have been in this state of suspended animation for a number of years. And now, we are beginning to see the pace of resolution pick up," Michael Fratantoni, chief economist of the Mortgage Bankers Association, told the Financial Advisor. In New York, nearly half of homes 90 days or more past due have been delinquent for more than four years, according to Fitch Ratings. That makes foreclosures in the state the longest in the nation, with a foreclosure taking over 1,000 days on average. One reason for the backlog is that New York is a judicial foreclosure state, meaning a judge must sign off on a foreclosure before it is complete. States that do not require a judge's signature tend to move more quickly on foreclosure proceedings.

In New York, much of foreclosure litigation involves proving ownership of the home and mortgage. Lenders who have reached a deal involving a loan modification are held up when the bank's attorneys had to prove the accuracy of the paperwork involved. One bank, Wells Fargo, has recently been accused of falsifying proof of ownership documents. According to an article in the New York Post, Wells Fargo may have created a detailed internal procedure for creating (false) documents needed for proving ownership. Mortgage defense attorneys have described these as "ta da" documents, because the documents appear miraculously just when needed after being absent for years.

Mortgage defense

For homeowners deficient in their mortgages, there are legal options. Loan modifications, short sales, and foreclosure defense may allow a homeowner to keep his or her house or get out from unmanageable debt. New Yorkers concerned about foreclosure actions should speak with a knowledgeable New York real estate attorney.