I’m reading this New York Times article about how many homeowners in default on their mortgages are hiring lawyers to fight the eviction/foreclosure process.
This is slowing the foreclosure process in many states, delaying a housing recovery and weighing down bank stocks. Why would anyone want to lend money for mortgages if people can get away with not paying their mortgages? Judges have become emboldened to force banks to renegotiate contracts.
So if contracts are not sacred in the mortgage world, who’s going to want to get into that business?
Feel good in the present with such delays but the price must be paid down the line in less money available for mortgages and at more restrictive and expensive terms.
And many foreclosure lawyers seem unable to meet a requirement, made last October by the New York Chief Judge Jonathan Lippman, to affirm the accuracy of their documentation.
“The affirmation has had a pretty chilling effect,” said Ann Pfau, New York’s chief administrative judge. “The attorneys for the banks tell us they can’t get through to the right people at their clients who can verify the information.”
Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure, according to LPS. The average over the last six months: 286. That is far lower than at any point since the recession began.