Banks Face Foreclosure Regulation by States
States across the country are proposing a range of new rules that would make it more difficult for banks to foreclose on troubled homeowners.
The moves have been prompted by concerns that lenders have been inefficient in restructuring mortgages, which results in unnecessary foreclosures, while using shoddy paperwork to repossess homes.
Lenders are strongly resisting the measures, arguing that they will introduce new bottlenecks in the foreclosure process that could obstruct the incipient housing recovery.
“Should all 50 states decide to go down their own path, lenders are going to have multiple processes, each with their own little nuances, and every single penny of that cost will be borne by tomorrow’s borrowers,” said David Stevens, chief executive of the Mortgage Bankers Association.
Such legislation is precisely what the nation’s largest banks hoped to head off in February when they agreed to pay $25 billion in fines and borrower aid to settle allegations of foreclosure abuse with federal agencies and 49 state attorneys general. That settlement laid out standards for how banks must treat borrowers.
Rest from the WSJ here…