The State of Foreclosures in the Holiday Season

In the holiday season, major lenders stopped eviction of homeowners, and in South Florida, courts called for halt in hearings and also sales of foreclosures.

Freddie Mac and Fannie Mae planned to stop evictions through foreclosures in the New Year and Christmas holiday season. Bank of America also said it would freeze its sales on foreclosures and evictions from Xmas to New Year holiday season on its own loans, and also those held by investors who would permit such moratoriums. In Broward, judicial court no. 17 stopped all foreclosures arranged at the year end. According to the court, any hearing of foreclosures arranged for that period had to be re-assigned. According to Miami-Dade County clerk, the court system would be shut down for coming two weeks as a 'matter of custom' despite not getting a court order like Broward.

At the end of the last year, it was time to take stock of the progress made by defense lawyers against major lenders.

* They have thrown light on the robo-signing scandal in which bank      employees rubber stamped foreclosure affidavits without checking facts.

* A couple of homeowners have uncovered fabricated and forged documents.

* Attorney General of Florida has started an investigation into major law firms  in the state with allegations of deceptive and unfair practices.

* These allegations of fraudulent practices by lenders inspired many of them  like JP Morgan Chase, Bank of America, GMAC and Fannie Mae to order a freeze  on foreclosures in September to start reviewing their procedures and check for  any errors. However, Fannie Mae and Freddie Mac resumed foreclosures in  November.

* There are two major legal rulings which have resulted in a much bigger role  for the homeowner in the courts. The first stipulates production of the original  note by lenders before they can start foreclosing on a home. The second  stipulates that lenders need to respond to defense offered by home owners    before the judge can grant foreclosures.

The important issue is what will be the impact of all this? There is a pending class action suit against major lenders to return properties to homeowners who lost their homes due to wrongful procedures. As a result, there would be havoc in the housing market if properties were returned. No one would show interest in buying foreclosed properties. The second effect is that the courts would be clogged more with foreclosure cases than before. It has been forecast that there will be a surge of foreclosures in this year. This will result in the slowing down of recovery in the housing market.