The Only Way to Eliminate the Foreclosure Backlog is Through Legislative Action

02/11/2014 02:28 PM (CST)

Nationwide year end reports show there were foreclosure-related actions on nearly 1.4 million U.S. properties in 2013, down 26 percent from 2012 and down 53 percent from the 2.9 million peak in 2010. Nationally, foreclosure filings in 2013 had dropped to the lowest annual total since 2007. However, many judicial states on the East Coast and Midwest are actually experiencing an increase in foreclosures.

According to Stephen P. Wright, an attorney with the Norwalk-based Goldman Gruder Woods, LLC, the promises of the Home Affordable Modification Program (HAMP) that had been established to help about 8 million struggling homeowners at risk of foreclosure never materialized.

As Mr. Wright writes in his recent article, lenders and servicers used its compliance procedure as profit centers.  A recent national study found it would take more than 10 years to resolve all the pending foreclosures in Connecticut, stalling economic recovery and creating untold anxiety for those affected.

That does not mean we should rush to allow banks to more quickly take peoples' homes. It does mean, however, the system needs to be restructured to be more fair, equitable and timely. Lenders or their servicers have to be held accountable for inexcusable delays. The "disconnect" between lender litigation departments and modification departments has to be eliminated.

As well, borrowers have to make reasoned decisions about the future of their home. The sale of foreclosed properties and properties that are being sold or offered for sale by the buyers on a short sale basis needs to be streamlined to broaden the market of potential buyers.

The delays currently associated with the process have limited the pool of potential buyers of distressed homes to investors because the process takes too much time to complete to attract typical home buyers.

It seems that if the Legislature can pass laws that do not have the intended results, it also can pass laws that rectify the situation, and it should do so in the current session. The housing crisis has gone on long enough; adding another decade to eliminate the foreclosure backlog is unconscionable.