Consumer Law

Foreclosure Reform

By Brian Wolfman

Let's assume we can all agree that foreclosures ought be accompanied by proper documentation and that a great many foreclosures accompanying the financial crisis were not. Less clear is what can or should be done about it looking backward. Voiding foreclosures may not be the answer (legally or otherwise). After all, many of the properties have been resold to new homeowners and reversing transactions on tens of thousands (or more) properties may not be the best way to emerge from an economic downturn. I just don't know.

But future reform is another question. Are the states considering legislation aimed at avoiding these problems in the future? This Washington Post article discusses legislation being debated in Virginia that would impose penalties on lenders who foreclose based on false documents, require banks to keep current records on loan status in government offices (including public filings whenever ownership changes), and give homeowners up to 45 days (rather than the current 15) to oppose a foreclosure in court. According to the Post, "The Virginia Bankers Association strongly opposes the overhaul, saying it would gum up the process."

Full post as published by CL&P Blog on January 16, 2011 (boomark / email).