An industry-wide halting of foreclosures will have uncertain implications for Durham’s increasing rate of housing foreclosures.
In North Carolina, Attorney General Roy Cooper asked 13 large mortgage lenders to respond by Tuesday to his request for them to temporarily halt foreclosures until the lenders can provide sufficient evidence that they use legal documentation techniques.
Cooper’s move to request foreclosure halting comes on the heels of a larger industry trend. Last week, Bank of America announced they were halting foreclosure sales across the United States. Other major mortgage lenders have followed suit, with lenders like JPMorgan Chase & Co. deciding to begin stopping foreclosures in some states, including North Carolina.
Lenders have been accused of using “robo signers,” untrained employees who sign hundreds of housing foreclosure documents daily without carefully reviewing the information on the documents. Many experts believe “robo signing” and other illegitimate procedures have led to improper foreclosures.
The announcement of foreclosure halting comes at a time when foreclosures have reached a new high, especially in Durham County.
According to the N.C. Administrative Office of the Courts, there have been 1,425 foreclosures in Durham County this year, as of September. In fact, foreclosures in Durham County have increased 12 percent compared to the same period in 2009. In the state of North Carolina, there have been 52,857 foreclosures so far this year.
But as Durham experiences a significant increase in housing foreclosures, Peter Skillern, executive director of the Community Reinvestment Association of North Carolina, says foreclosure halting will not necessarily help Durham’s foreclosure problem.
“It’s really unclear how it’s going to impact Durham,” Skillern said. “There are competing forces that are under way here.”
Skillern said Bank of America is only planning to halt foreclosures for 30 days to review documents, so it is unknown if the halting will affect Durham. A spokesman for Bank of America has said that during those 30 days, it is estimated that tens of thousands of foreclosures will be reviewed.
Skillern said the documentation review process has also not been fully explained.
“Will there be third parties involved or will Bank of America just review documents at a later time to reevaluate?” Skillern said. “It hasn’t been made clear.”
Larry Jarvis, Durham’s assistant director of community development, said the rapidly escalating amount of foreclosures in Durham County have prompted the creation of foreclosure workshops and counseling services. Durham has also been awarded money from the Department of Housing and Urban Development’s Neighborhood Stabilization Program to alleviate problems associated with foreclosures.
“If foreclosures decrease, Durham is better off,” Jarvis said.
While foreclosure halting may help borrowers, many experts say it is uncertain how the halting will affect the housing market. In a statement Monday, Tim Ryan, chief executive of the Securities Industry and Financial Markets Association, said it would be “catastrophic” to the housing market if nation-wide foreclosure halting occurs.
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