Cleveland Fed Discusses Fast-track for Ohio Foreclosures

by on Foreclosure Crisis

Ohio has been one of the hardest-hit states when it comes to the foreclosure crisis. While foreclosures are down year-over-year in Ohio, they rose by 23 percent from December to January. Cities like Cleveland and Columbus have been awash in foreclosures for several years now, and countless solutions have been proposed to remedy the problem.

Now, the Federal Reserve Bank of Cleveland has proposed another solution: a fast-track process for Ohio foreclosures that could dramatically cut the amount of time it takes to resolve a foreclosure in the Buckeye State.

Under the new proposal, the Fed would recommend a process that would take Ohio foreclosures from six months to just two months, a drastic decrease that would help alleviate some of the backlog that has accumulated in Ohio over the years. The procedure would essentially call for one hearing per property, instead of a long series of hearings and motions as is the case now.

This is similar to proposals that have been at least contemplated in other hard-hit states, states like Florida, New Jersey, and New York. And it is also similar to proposals that have been put forth in Ohio in the past, including one measure brought before the state legislature last summer. That measure – one that would change the law concerning vacant homes and other properties – has not made it out of the legislature.

Would the fast-track process streamline the foreclosure pipeline in Ohio and give cities like Columbus and Cleveland relief? It would – but some, including foreclosure defense attorneys, argue that it would remove much-needed protections for homeowners who otherwise would more easily lose their homes.

A fast-track process would serve to lower foreclosure costs for lenders, as well as potentially remove properties from the active inventory and help place them in the hands of investors or homebuyers who could rehabilitate them and thereby restore their value – and the value of homes surrounding them.

The potential impact of this measure on neighborhoods as a whole is one of the more compelling reasons behind a foreclosure fast-track process in Ohio. And while the problem of vacant and abandoned foreclosures would still exist, other proposals – like programs in Cleveland to tear down vacant foreclosed properties – can help mitigate that problem.

In any case, the proposal from the Fed is one to watch, and one that could be a pilot program for other states across the country.