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Thoughts on last year’s foreclosure revisions

Question time: For those who have worked on foreclosures since the July 2010 revisions of Real Property Article §7-105.1, what do you think? Have the mediation components and other changes made life any easier? Do you think the revisions help the mortgagor in foreclosure proceedings as they were intended? As an attorney who has had the pleasure ...

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  1. In my experience handling foreclosures, the changes to foreclosure practice since 2008 have been just short of disastrous.

    The incredible increase in costs, delays, uncertainty, malpractice traps and little to no, offsetting benefits to mortgagors has compounded the housing problem. Everyone I have spoken to in the housing and finance industry knows that, one way or another, the so-called mortgage crisis is not going to go away until the glut of bad loans and over-production of residential housing gets flushed out of the system.

    There is simply no getting around it. From what I have seen, the majority of foreclosures do not involve borrowers who have suffered a temporary set-back (i.e., job loss, medical issue) and need a modification to catch up on arrears and reinstate the loan. Those people exist certainly, but those people generally either get their loans readily modified by the lender or go into Chapter 13 and get the breathing space they need to cure arrears and keep their homes. The vast majority of people who are under foreclosure are those who are years behind on their mortgages. Let me repeat that. They are *years* behind on their mortgages. They have often gone through bankruptcy at least once, had their cases dismissed, and gone back in again. They could not afford the home to begin with or experienced a significant life change (such as divorce) that wiped out their ability to afford the home. I am not placing any blame on these borrowers. Plenty of culpability to go around. But this set or sub-set of borrowers simply cannot afford to keep their homes and the homes need to be flushed– that is the only, appropriate metaphor here– through the foreclosure system as quickly as possible.

    Instead, Maryland politicians chose to transform what had been a streamlined, well-functioning foreclosure system into the most convoluted, complicated, trap-laden process imaginable. One that is crushing courts with oversight mandates and clogging up the courts. At the end of the day, this glut of homes will need to be dealt with and the relatively few but well-publicized abuses (robo-signing, false notarization etc…) only cloud this reality.

    If the changes to the law had been enacted as a temporary, stop-gap, emergency measure with a sunset provision built in, then at least the damage would be confined. Instead, there is little possibility that these laws will ever be repealed and the cost to new home buyers will be permanently escalated to factor in the higher cost of doing business in Maryland. Congratulations, Maryland. One more reason not to do business here. I am sure the Governors of Virginia and Delaware appreciate it.

  2. Mr. Tschirgi,

    Excellent breakdown of what I’ve heard from most foreclosure attorneys, notably, your assessment that, “the so-called mortgage crisis is not going to go away until the glut of bad loans and over-production of residential housing gets flushed out of the system.”

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