FHFA to States: Stop the Roadblocks, Speed Up Foreclosures
States and municipalities may be inadvertently putting in roadblocks and costing taxpayers more when they approve policies that prolong the foreclosure process, such as by extending mediation services, Alfred Pollard, general counsel for the Federal Housing Finance Agency, testified at a House panel on Monday.
Many of those foreclosures that get delayed fall in the books of one of the government-sponsored enterprises, Fannie Mae and Freddie Mac, which the FHFA regulates. Fannie and Freddie have posted big losses the last few years from delinquent loans and already owe the Treasury Department more than $150 billion in taxpayer bailouts.
“It would be very valuable for states and localities to pause in their passage of rules that may create impediments to smooth foreclosures and to review the balance between home owner protections and the movement to efficient and professionally-undertaken foreclosures,” Pollard told the House panel. “Simply permitting home owners to stay in their homes for five or six hundred days or longer while not paying their mortgages, costs neighborhoods, costs lenders and, ultimately, costs taxpayers and future borrowers.”
As of Dec. 31, Fannie and Freddie had more than 568,000 loans on their books that have been delinquent for at least a year. Thirty percent of those come from Florida alone. More than 166,000 mortgages that Fannie and Freddie guarantee in the state are sitting in limbo — stretching more than a year without a payment, HousingWire reports.
Florida lawmakers in February tried to get a bill approved to quicken the pace of foreclosures, but the bill recently died in the state Senate. In Florida, where foreclosures must wind through the courts, foreclosures average 676 days.