Real estate agents expect more lenders to sell homes in Maryland at a loss instead of foreclosing if the state's Court of Appeals approves a new rule giving courts more power in the foreclosure process.
With the potential crackdown on foreclosures -- a response to a national investigation into unfair foreclosure practices that includes hundreds of falsified documents in Maryland -- banks may be more amenable to "short sales" to avoid a drawn-out foreclosure proceeding.
Short sales occur when a financially distressed homeowner owes more to the bank than the home's value. To enable a sale, the bank agrees to forgive part of the homeowner's loan.
"[Banks] have been dragging their feet in short sales," said Dennis Melby, district vice president of the Maryland Association of Realtors. "But if they go to foreclosure and it's dragged out for even longer ... this lights a fire in them to finish."
The Maryland judiciary's Standing Committee on Rules of Practice and Procedure has passed an emergency proposal that would give judges more oversight in foreclosure proceedings. The rules, which include requiring people who have signed a legal document to attest to its validity in court, could slow down the process.
The emergency proposal, which is scheduled to go before the Court of Appeals on Tuesday, addresses recent revelations that hundreds of false affidavits have been filed in Maryland courts, primarily by bank employees who signed off on foreclosure documents without reading them.
Alan M. Wilner, chairman of the rules committee, called the acts "an assault on the integrity of the judicial process."
The committee said thousands of documents may need to be examined for fraud for which a special examiner should be appointed. They propose those additional costs be charged to the foreclosing party except in cases where the borrower's affidavit is being examined.
But real estate agents said the rule change, if approved by the appellate court, doesn't change the larger picture -- it can't give homes back to people who can't afford the payments.
"At closing when you signed all those documents you agreed to pay that mortgage," said Joe Doman, a Re/Max agent who specializes in short sales. "People are looking for a loophole to get out of it."
Read more at the Washington Examiner
With the potential crackdown on foreclosures -- a response to a national investigation into unfair foreclosure practices that includes hundreds of falsified documents in Maryland -- banks may be more amenable to "short sales" to avoid a drawn-out foreclosure proceeding.
Short sales occur when a financially distressed homeowner owes more to the bank than the home's value. To enable a sale, the bank agrees to forgive part of the homeowner's loan.
"[Banks] have been dragging their feet in short sales," said Dennis Melby, district vice president of the Maryland Association of Realtors. "But if they go to foreclosure and it's dragged out for even longer ... this lights a fire in them to finish."
The Maryland judiciary's Standing Committee on Rules of Practice and Procedure has passed an emergency proposal that would give judges more oversight in foreclosure proceedings. The rules, which include requiring people who have signed a legal document to attest to its validity in court, could slow down the process.
The emergency proposal, which is scheduled to go before the Court of Appeals on Tuesday, addresses recent revelations that hundreds of false affidavits have been filed in Maryland courts, primarily by bank employees who signed off on foreclosure documents without reading them.
Alan M. Wilner, chairman of the rules committee, called the acts "an assault on the integrity of the judicial process."
The committee said thousands of documents may need to be examined for fraud for which a special examiner should be appointed. They propose those additional costs be charged to the foreclosing party except in cases where the borrower's affidavit is being examined.
But real estate agents said the rule change, if approved by the appellate court, doesn't change the larger picture -- it can't give homes back to people who can't afford the payments.
"At closing when you signed all those documents you agreed to pay that mortgage," said Joe Doman, a Re/Max agent who specializes in short sales. "People are looking for a loophole to get out of it."
Read more at the Washington Examiner
No comments:
Post a Comment