Mortgage Loan Compliance | Homeowners Who Fight Foreclosure Stay Longer

Nationwide, the average time it takes to process a foreclosure - from the first missed payment to the final foreclosure auction - has climbed to 674 days from 253 days just four years ago, according to LPS Applied Analytics. It takes much longer in states like Florida, where the process averages 1,027 days, nearly 3 years. In D.C., foreclosure averages 1,053 days and delinquent borrowers in New York often stay in their homes for an average of 906 days.

Delinquent borrowers who face foreclosure are learning that they can stay in their homes for years, as long as they're willing to put up a fight. Among the strategies: Challenging the bank's actions, waiting to file paperwork right up until the deadline, requesting the lender dig up original paperwork or, in some extreme cases, declaring bankruptcy.

Many of these homeowners are staying in their homes based on a technicality. There is rarely any dispute over whether or not they have stopped paying their mortgage, said David Dunn, a partner at law firm Hogan Lovells in New York, who represents banks and other financial institutions in foreclosure cases.

"In my experience, they never say, 'I'm not delinquent' or 'I want to pay my bill but I'm confused over who to send it to,' or 'oh my God, you mean I didn't pay my mortgage?' They're not in technical default. They're in default because they're not paying," he said.

Ironically enough, the banks have given delinquent borrowers some of the ammunition they need to delay the foreclosure process. When the Robo-Signing scandals revealed that bank employees signed paperwork attesting to facts they had no personal knowledge of. Now, borrowers are routinely challenging that paperwork.

Sometimes just asking the bank to produce the paperwork that shows it is the legal holder of the mortgage note can stall a repossession, said attorney Robert Brown. Since mortgages are often transferred electronically through MERS, the official paperwork often gets misplaced.

In some of the more extreme cases, borrowers will file for bankruptcy in order to block a foreclosure. In these instances, courts order creditors to cease their collection activities immediately. Home auctions can be postponed as the bankruptcy plays out, which can take months.

David Berenbaum of the National Community Reinvestment Coalition (NCRC), a community activism group, disputes any contention that owners are gaming the system for free rent and hurting the housing market. "Most people do everything in their power to maintain these homes," he said. "They take in relatives, get second jobs and even rent out rooms." What really needs to be done, he said, is for lenders to work harder to find solutions that allow delinquent borrowers who can afford to make reasonable mortgage payments to keep their homes.

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Mortgage Loan Compliance | CA Attorney General Sues Mortgage Giants

The California Attorney General Kamala Harris has filed a lawsuit against Fannie Mae and Freddie Mac over mortgage and foreclosure problems. The suit comes after Fannie and Freddie's regulator, the Federal Housing Finance Agency, blocked Harris's inquiry into the mortgages and foreclosed properties the Government Sponsored Entities (GSE’s) own in California.

In the lawsuits she filed Harris says that Fannie and Freddie hold extensive information that is critical to her investigation. She notes that between 2007 and June 2011 over 768,000 homes have been foreclosed in California and says those foreclosed homes caused numerous problems in her state including criminal activity like prostitution and drug trafficking.

Fannie and Freddie play and central role in the mortgage and foreclosure issues in California, she says in her suit. As a result, Harris requested answers to questions she says are critical to protecting the health, safety and welfare of the state's residents.

But instead of complying, Harris says in her complaint, Fannie and Freddie have failed and refused to provide any information her office requested.

In September Harris pulled her state of out a nationwide foreclosure probe of some of the nation’s biggest banks over their shady foreclosure practices. That investigation was assembled by the country’s attorneys generals nearly a year ago to look into fraudulent foreclosure practices by banks. Harris backed out of the settlement because “the the nation’s five largest mortgage servicers were not offering California homeowners relief commensurate to what people in the state had suffered.”

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Mortgage Loan Compliance | Mass AG Gets Serious and Sues Five Lenders

The Massachusetts Attorney General, Martha Coakley, has filed a lawsuit against five large U.S. banks accusing them of deceptive foreclosure practices, a signal of ebbing confidence that a multi-state agreement can be worked out.

The Massachusetts lawsuit, filed in state court in Boston, accuses Bank of America Corp, JPMorgan Chase & Co Inc, Citigroup Inc, Wells Fargo & Co and GMAC of deceptive foreclosure practices, such as using robo-signers and false documents.

For more than a year, state and federal officials have been negotiating a deal in which banks would pay billions of dollars in fines - to go toward housing relief - in exchange for legal protection against future suits.

"Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law," Coakley said in a statement.

The attorney general in Iowa, Tom Miller, who is leading the negotiations for the states, said in a statement they hope to reach a settlement "soon." He also said Coakley had indicated she is still open to joining the settlement.

"We're optimistic that we'll settle on terms that will be in the interests of Massachusetts," Miller said.

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