Residents’ Frustrations Over Bank Foreclosure Homes Heard

by Simon Lindsay on Foreclosure Crisis

U.S. House Committee on Oversight and Government Reform Chairman, Representative Edolphus Towns and Representative Tom Perriello met with several distressed homeowners in Virginia to discuss the rapidly increasing number of bank forclosed homes, particularly in the 5th Congressional District which covers the Charlottesville area to Danville and Martinsville.

Perriello, who hosted the roundtable discussion, together with Towns were soliciting ideas from bankruptcy lawyers, housing counselors and residents who are having difficulty keeping their accounts current and avoiding foreclosure.

Perriello explained that until recently, foreclosure was not a major concern in Charlottesville because of the isolation of its economy. However, he added that foreclosure is starting to cause anxiety among residents, especially those who are behind on their mortgage payments or at-risk of defaulting.

On his part, Perriello claims that the number of bank forclosure homes in his area has drastically increased since the start of the financial crisis. As of October 1 last year, Perriello’s jurisdiction registered a total of 24 bank foreclosure homes for sale. Last May 1, about 237 properties went into foreclosure auctions.

Perriello also noted that the inventory of foreclosure homes in his area increased to 369 in May from 55 on October 1, representing a jump of 571 percent.

Meanwhile, Housing Opportunities Made Equal protection coordinator Paula Sherman said that one of the biggest hurdles facing troubled homeowners who want to save their properties from foreclosure is the lack of cooperation or response from their mortgage lenders.

She pointed out that part of the reason why homeowners were having a hard time establishing communication with their lenders is because loan companies have reduced the number of their workforce that most of them are under staff.

She added that some homeowners were lucky to establish contact with lending companies and have their cases reviewed and the loan terms modified. However, the backlog of cases handled by lending companies was causing delay of up to 10 months.

In the meantime, Sherman said, homeowners are most likely getting further behind on their mortgage payments, with some going into complete foreclosure.

As a remedy to what she called the unresponsiveness of loan servicers, Sherman suggested that the Congress passed a bill that would delay foreclosure proceedings while homeowners are seeking ways to modify terms of their loans to make them affordable.

Last week, the House approved the Mortgage Reform and Anti-Predatory Lending Act which prevents lending practices that have contributed to the bank forclosure homes.