Thursday, April 10, 2014

Foreclosing Lenders Turning to Courts for Protection?

The conventional wisdom has been that mortgage lenders should, when possible, avoid foreclosing through the judicial process since involving the courts can result in long delays and the incurring of substantial legal expenses and court costs.  However, in a surprise turn of events Bloomberg News reports that many lenders are now showing a preference for the judicial foreclosure process as a way to protect themselves from a regulatory/legal misstep that might lead to fines or damages.  You can read the article here:

Lenders are increasingly using U.S. courts to foreclose on delinquent homeowners in states where it’s not required to reduce the risk of falling afoul of new protections . . . The shift to the courts comes after laws were passed in states such as California and Hawaii that give consumers new tools to fight foreclosure. . . “Going through the judicial process now protects lenders,” said Thomas Lawler, a housing consultant and former chief economist at Fannie Mae. “Even though it takes longer, all sorts of eyes starting with the judge’s will reduce the likelihood of mistakes and potential liability under new foreclosure laws.”

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