As Long Island families facing foreclosure battle endlessly with mortgage lenders, they may feel like characters in a frustrating financial drama. In such situations, homeowners are easily overwhelmed due to limited knowledge of the legal process and the timeline for finalizing a foreclosure. Requirements to complete the process vary from state to state, so people who want to stop home foreclosures should become familiar with local laws to avoid rapid property loss.
New York residents should take note of recent studies that suggest each state’s foreclosure speed could be directly related to improvements in the state’s housing market. While factors such as job growth and the severity of past housing decline are considered influential, reports say states that complete foreclosures more quickly have experienced steeper price increases on residential real estate.
Presumably, the difference lies in judicial involvement. States such as New York, New Jersey and Florida reportedly require court approval to finalize the process, while Nevada, Arizona and California are among those that don’t. Research from the Internet company Zillow indicated that, on average, property values increased by 5.4 percent in the 24 states without mandatory court involvement, compared to 3.2 percent in states where cases are managed judicially.
One real estate consultant suggests that a state’s ability to turn over contentious properties faster may contribute to upturns in home sales. An economist for Zillow points to investor confidence as another factor, since high foreclosure rates may discourage potential buyers. In the three judicial-foreclosure states mentioned above, mortgage loans tied up in foreclosure reportedly have a median overdue status of 31 months. However, in their three nonjudicial counterparts, the median is less than 22 months.
Extending the foreclosure process may negatively impact overall home sales, but it can also provide homeowners the time they need to stabilize their finances. Mortgage borrowers may have the opportunity to improve their situations by researching homeowner rights and government programs designed to protect families from losing their homes.
Source: USA TODAY, “States’ foreclosure pace affects home prices,” Julie Schmit, Feb. 16, 2013