DS News - HSBC

74 74 a foreclosure, but it can be hard to keep one's head in the high-stress fog of bank notices and deadlines, combined with the borrower's economic, social, and psychological strife. ere is relief, but the question is how to find it—or for it to find the borrower. "A big challenge is targeting foreclosure prevention counseling effectively," said Nicole Harmon, VP of Foreclosure Prevention Programs at NeighborWorks America, a Washington, D.C.-based organization that supports a network of more than 240 nonprofits with technical assistance, grants, and training for 12,000-plus professionals in affordable housing and community development. "Because of the microclustering of foreclosure, nonprofits have a tough time getting the word out to the homeowners who need it the most." Harmon explains that housing markets go beyond local; hyperlocal is probably the better word when it comes to foreclosures. Within different MSAs and Census tracts, NeighborWorks America will see areas where home values have recovered, but also "micro- pockets" where recovery is painfully slow. Job growth may be up in the overall MSA, but that certainly doesn't mean all neighborhoods are experiencing the boost. "at makes it difficult for homeowners who were in trouble to get out of trouble," Harmon added. "Our grantees report that [the market uncertainty] has continued as servicers deprioritize loss mitigation again, and the sales of non- performing loans have restored some hardline positions among new loan owners, i.e., commercial investors. e unpredictability of the foreclosure process has been an evergreen complaint." According to Klein's paper, however, policies focused on loss mitigation have failed to adequately alleviate the harmful impact of abandoned properties and thus the vicious cycle of depressed property values and subsequent foreclosures. REGULATIONS AND RESTRAINTS Increased regulations and court requirements certainly add to the lengthy foreclosure timeline, but it's not just the system slowing things down, according to Diane Bowser, EVP of Special Servicing at Selene Finance. "Borrowers and their attorneys have become incredibly savvy when it comes to slowing, stalling, and even re-starting the process," she said. "Despite our efforts to streamline the process and ensure necessary records are in place and accurate, we cannot do anything about the litigious opposing counsels that represent borrowers in foreclosure." Bowser points to Florida as having had the highest number of contested assets in the country. "Some of these opposing counsels are paid a monthly fee to simply delay foreclosure actions—and it works," she added. "ese attorneys file pleading after pleading, for as long as they can, to delay a foreclosure that is, most of the time, inevitable." In New York, a servicer can get bogged down by the additional steps needed to complete a foreclosure, and then experience further delays when courts grant borrower motions for the reschedule of foreclosure hearings and sales. If there was any doubt, "screeching halt" are the words the Selene Finance executive used. e Houston-based mortgage company, a leading servicer of nonperforming loans, routinely receives transferred portfolios with loans at various stages of the foreclosure process. As the servicer of record, it must validate each aspect of every affidavit and provide screen prints and documents supporting the review. Reviews can lead to required revisions of language and numbers, which, of course, mean more time and manual work. Inaccurate or insufficient records from prior servicers can have the process stuck in the mortgage mud from square one. "It's no surprise that this is an incredibly time-consuming process, and in some states, we have multiple affidavits that are required," Bowser said. "Unfortunately, if we are not able to validate that the prior servicer took all required steps before and through foreclosure or that their documentation is inaccurate, it could lead to us having to start the entire process over." THE WORD IS BIG e housing downturn and resulting wave of foreclosures were huge. Klein reported that more than $2 trillion in property value evaporated as a result of approximately 13 million foreclosures. Big problems were fueled by the biggest industry actors, according to Rep. Jonathan Dever (R-Ohio). "How do we deal with this gigantic mass that we've been handed?" Dever asked. "Largely, it's been a failing, quite frankly, of our largest institutions and our federal government with the policy they created that lent itself to that [mortgage] balloon and that pop. We're still trying to deal with the aftermath of it." Dever, an attorney who has worked on both sides of foreclosure cases in the Buckeye State, knew it would take considerable effort to right the wrongs. His fast-track foreclosure legislation that became law in 2016 began as a working group of various lenders, property remediation professionals, plaintiff and defense lawyers, and more. eir monthly meetings, which would have between 40 to 60 people in a room "working through the language and thinking about the unintended consequences of a comma," went on for 18 months before introduction of the bill. Big problems require big effort. According to Community Blight Solutions, only two fast-track foreclosure laws are on the books nationwide—in Ohio and Maryland—so much work remains. Meanwhile, another big wave looms in the not-too-distant mortgage future. "Demographics are merciless," said Kevin Hildebeidel, a lead attorney at Stern & Eisenberg, P.C., who noted that the number of people over 65 should double and over 85 should triple in the next 20 to 30 years. "e question remains to be seen: will millennials muster enough purchasing power to actually step up and buy homes from retirees at full market value or will the U.S. face a situation similar to Japan's 'Lost Decade' with continuing declines over a long period of time?" "A big challenge is targeting foreclosure prevention counseling effectively. Because of the microclustering of foreclosure, nonprofits have a tough time getting the word out to the homeowners who need it the most." — Nicole Harmon, VP of Foreclosure Prevention Programs, NeighborWorks America

• Cover