According to the St. Petersburg Times, “Gov. Rick Scott, House Speaker Dean Cannon and Senate President Mike Haridopolos all say they are interested in considering legislation to change Florida laws so judges won’t have to referee foreclosures.”

No doubt about it, if lenders don’t have to go through the court system to foreclose you can bet the process would be a lot faster, cheaper and easier. Not only that but most states — “nearly” 30 according to the St. Petersburg paper — already allow lenders to foreclose without a court appearance.

The whole idea reminds one of George Santaya’s definition of fanaticism — that’s when you redouble your effort and forget your aim.

The view here is different: The foreclosure process ought to be right, accurate and fair. Borrowers who do not pay their mortgages must face foreclosure — and lenders who want to foreclose must be able to show they own the note and that the borrower has not made required payments.

As to helping judges avoid the duty of refereeing, that’s what judges do.

Gandhi

As Gandhi said “there is more to life than increasing its speed” and the same is true of foreclosures. The goal is not to be swift, it’s to be fair and just.

As to making the process easy, how much easier could it possibly be? The typical foreclosure takes a few minutes of court time. The rules which govern the process are influenced by lender lobbyists. If you think that borrower lobbyists are involved then name one national or state association which represents borrowers. Name one political action committee (PAC) that exists to advance the interests of borrowers. You’d have better luck enjoying unicorn steaks for dinner.

Truth is, foreclosure ought to require precision and honesty, two things you don’t get when clerks are signing thousands of foreclosure affidavits each day.

Isn’t accuracy a fairly minimal standard when the result of a mistake could be that a family will be tossed out onto the street? Maybe your family?

The shame is not that Florida — a state which ranks among the top ten foreclosure centers in the United States according to RealtyTrac — wants to end protections for families, it’s that “nearly” 30 states have already done so.

The Case For Slow Foreclosures

The foreclosure mess exists in large measure because lenders wrote the rules and federal regulators didn’t enforce even the minimal standards already on the books. The Federal Reserve, in particular, did not use its authority under the Home Ownership and Equity Protection Act to stop “unfair and deceptive acts or practices.”

The reality is that if the state of Florida speeds up the foreclosure process its situation will be worse, not better. Here’s why:

Let’s imagine that protecting families is not an important priority. If you speed up the foreclosure process then at the end of the day you have, ta da, more foreclosures. Not all of the properties which are foreclosed will be sold at auction, which means they will have to be added to lender inventories. Increase the number of lender-held properties and they have additional costs for security, maintenance, insurance and taxes — and reduced profits. Meanwhile, with more foreclosure in communities there’s additional pressure to reduce local home prices.

Is this really good for the state of Florida? Or is speeding the foreclosure process counter-productive?

You be the judge — something they need in the Sunshine State.

Why Foreclosures Should Be Slower is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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If you’re a borrower having ready access to loan money is great. But when underwriting standards get too low, then a new problem emerges: failing lenders and a serious financial threat to everyone.

Julie L. Williams, the acting Comproller of the Currency, the federal agency that oversees 2,600 national banks representing 58 percent of the nation’s banking assets, has told the lenders under her command that they need to tighten loan standards.

“As we see other nation’s economies bobbing in turbulent waters, it is doubly important that, here in the United States, bankers address and correct any weaknesses in their loan underwriting, mindful of the possibility that our own economic seas could also turn stormy,” she said in a speech to a meeting of the Bankers Roundtable, an industry group.

“Taking care now,” she emphasized, “is important to the future of each of your banks — and to the health of the nation’s economy.”

As an example of questionable underwriting, Williams mentioned one company that was able to obtain a $500 million line-of-credit at 7.2 percent interest — even though it had no working capital, operating losses of more than $50 million, and a negative net worth.

While Williams statement was largely directed toward commercial lending, there is no doubt that mortgages are a concern. The Comptroller’s Offices says that, “in the consumer area, banks are continuing to tighten lending standards in most areas. Examiners reported tighter standards for credit card loans, direct consumer loans and indirect consumer loans. Examiners listed a number of factors for the tightening, including risk appetite, market strategy and potential change in the economic outlook.

“The one exception on the retail side is in home equity lending, where eased standards prevailed.”

The “eased” standards are not listed, but here are a few from my collection.

• Loans for more than the value of the property, 100 to 150 percent financing.
• Loans where properties are valued with drive-by appraisals and no interior examination.
• Mortgages with 3 percent down — but borrowers are allowed to get their up-front cash from credit cards.
• Loans where there are no cash costs up front because such expenses are paid by the lender and recaptured over time in the form of higher rates — unless, of course, the borrower quickly re-pays or refinances.
• Loan programs which accept verbal employment confirmations.

Ms. Williams does us all a favor by her remarks. No doubt lenders will need to weigh her words seriously and put an end to lending practices that should discomfort everyone.

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Published originally by Realty Times on September 29, 1998 and posted with permission.

Easy Credit May End As Lender Risk Grows is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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