Foreclosures Of Most Us States Bypass Judicial Process

A team of attorneys generals of 50 states is investigating the case of banks and

servicers using thousands of documents that were not properly checked by its employees. More than half of foreclosures happen in 27 states which have no compulsory supervision by courts.

There is often a clash of issues in states in which trustees employed by mortgage servicers and lenders, instead of courts, oversee the process of foreclosures. Trustees get remuneration by the processing of loans and faster they complete it, the greater is their business.

In a judicial state, the lender has to submit a law suit in order to start foreclosure. But in the case of a few non-judicial states like Colorado, a court order is required to permit a sale as per the National Consumer Law Center. In a few non-judicial states, such as Washington, a bank employs a trustee to deal with foreclosure and the documents are not reviewed by courts.

However, in the case of judicial states numbering 23, homeowners can present complaints before the judges overseeing foreclosures. Attorneys general of non- judicial states like Texas, Washington, and Arizona are carrying on independent investigations of practices of mortgage foreclosures and overseeing documents used for foreclosures.

Rob McKenna, attorney general of Washington said at a press conference in October that the foreclosure process in the state often consists of faulty documents, faulty chains of ownership, conflicts of interest and inability to conduct mediations necessitated by law.

McKenna sent around 50 letters to trustees in Washington, calling for them to freeze foreclosures where documentation had not been assured as signed legally or cases where chain of ownership of homes was not evident.

Washington is expected to have 40,000 foreclosures in 2010 compared to 2009 figure of 31,000 as per Seattle based Statewide Poverty Action Network. Its officials pointed out that the state was ranked 17th in the nation regarding foreclosures.

Majority of foreclosures in the state are done by a few trustees. Around 60 trustees work in Washington. Most are affiliated to law firms. Trustees get paid an agreed amount depending on the complexity of the case. The system of trustees was instituted as less costly and more efficient for lenders and borrowers. In non- judicial states, borrowers can sue legally to halt a foreclosure. Here, there is no clash of interest in lenders employing the trustees.

by: Dywon Erick Dylon

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