Judiciary Steps in to Apply Brakes to the Foreclosure Engine
The South Carolina judiciary has stepped in to apply brakes to the foreclosure engine. In the second quarter of this year lenders accelerated their foreclosure activity in Charleston region. At this point the Supreme Court ruling slowed down the pace causing lesser number of foreclosures.
This court-imposed restriction cannot be taken to be an indication that the economy is turning around. But something being better than nothing, the order of the highest court has managed to keep hundreds in their homes – safe from imminent danger of eviction.
Attorney Lil Ann Gray of the State Department of Consumer Affairs said, “There’s no magic bullet, but consumers now have options, and the attitude in the industry is slowly changing. The attitude in the industry was, ‘We’ll just foreclose if you can’t come to terms or work with us …They are now encouraged to do foreclosure-avoidance techniques if possible.”
According to the conditions laid down by the Obama government (Making Home Affordable plan) the lenders have to enquire if their borrowers qualify for reduction of monthly mortgage payments. The plan involves $75 billion to be disbursed as incentives to lenders, servicers and borrowers. The lender cannot start foreclosure proceedings without checking on the borrower’s eligibility to change loan terms. This has led to a sharp fall in foreclosure filings.
A survey undertaken by The Post and Courier covering June – it being the month following the court order, shows that in Charleston region 284 foreclosure proceedings were initiated. This is the lowest number since more than one year.
Across USA foreclosures increased by 4.5% during June but in Charleston region it fell by 32% compared to May. During the second quarter the number of foreclosures in Charleston was 1,242 showing a drop of 11% from the previous quarter.
Those lenders that have started taking foreclosure action are expected to give an explanation to the court as to why their borrowers were not considered eligible for assistance. Many owners were disqualified because the houses in question were not their primary places of residence. Rented and second homes are not qualified for help from the Obama plan. There are other owners who would not be able to manage their reduced mortgage amounts. There were some who did not respond to the enquiries being made by the lenders. Loans not covered by Fannie Mae and Freddie Mac do not come under the purview of the plan either. It means lenders are at liberty to proceed with foreclosures.
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