A Look at Foreclosure Laws

by on Foreclosures

Foreclosure Notice, Gavel and Model Home

The foreclosure crisis and wrongful foreclosures by many lenders, especially throughout 2009 and 2010, has led many states to review and revamp their foreclosure laws in an effort to better protect homeowners. Let’s take a look at some of the foreclosure laws and how they are working (or not working) in the current real estate market.

California’s Homeowner Bill of Rights

One of the most talked about new legislation is California’s Homeowner Bill of Rights. This bill went into effect at the beginning of this year and has supposedly been effective in decreasing foreclosure activity throughout the state. Time will tell whether this law is truly doing what it is designed to do or if foreclosure activity has declined as a result of something entirely different.

Illinois Foreclosure Rules

California is not the only state current seeking to revamp foreclosure rules and laws in an effort to reduce foreclosure activity and protect homeowners. In fact, the Illinois Supreme Court recently created a rule requiring lenders to foreclose on a property as a last resort – only after other methods are exhausted.

The video below has more information on these new rules.

Why Foreclosure Laws and Regulation Matter

Although some foreclosure laws may seem trivial at first glance, these laws are integral for not only real estate market progress toward recovery but also a strong real estate market in the future – a market that can hopefully avoid the pitfalls of the last few years. Without laws in place to protect homeowners, and policies being created to speed up the judicial review process (i.e. in Florida), the past will repeat itself and the recovery will continue to be delayed in many states.

Granted, there has not been a state that has created a “perfect” way to handle foreclosures that both protects homeowners and expedites the foreclosure process; however, many states are attempting to create these laws as we speak.

All eyes are on state lawmakers and key figures in the national government to see what will be done to help prevent a repeat of the last few years while also providing protection for struggling homeowners as well as compensation for those who were victim to wrongful lender actions.

One thing is certain: Lenders are not being regulated property and the past is likely to repeat itself unless these banks are held accountable.

In conclusion, now is the perfect time to change foreclosure rules and laws in an effort to protect homeowners, make progress toward recovery, and help to ensure that the last few years do not occur again in the foreseeable future. Time will tell which laws are most effective and hopefully other states will adopt the effective laws creating a stronger, more stable real estate market for the future.