It’s too easy to foreclose on a home in Georgia, the state Supreme Court said in a ruling last spring following the epic wave of repossessions produced by the housing bust. But the state’s top judges also said they would leave it to lawmakers to make any changes they thought necessary.
Partway through the legislative session, no bills on the foreclosure process have been introduced and the heads of both the House and Senate banking committees said they do not expect any.
Consumer advocacy group Georgia Watch says it is working with a potential sponsor to propose changes, but that lawmaker has not yet agreed to sign on.
Nearly 654,000 homes have been foreclosed on in Georgia since 2007, according to RealtyTrac. While Georgia was the ninth-largest state by population in the 2010 Census, it ranks fifth for foreclosures per housing unit for the length of the crisis.
Foreclosure notices in metro Atlanta have been falling since 2010, numbers from Kennesaw-based Equity Depot show. For some, that indicates that the problem has already been fixed. Others see it as a sign to act before the start of the next foreclosure meltdown.
“If this problem is allowed to linger, the next time there’s a crisis, we’re going to have a repeat of the last several years,” said John Bartholomew, a staff attorney at Atlanta Legal Aid’s Home Defense Program. “Hundreds of thousands of people lost their homes. Significant numbers of those individuals probably didn’t have to.”
The issue of foreclosures is a “very important” one, and “not to be taken lightly,” said state Sen. John Crosby, R-Tifton and chair of the Banking and Financial Institutions Committee. Still, Crosby said he thinks the problems many homeowners experienced over the past several years had little to do with Georgia’s foreclosure laws.
“It’s the economy, rather than the process, is my thinking,” he said. “Some folks perceive a problem when maybe there’s not a problem with the process.”
Georgia’s process is quicker than that of many other states. The “nonjudicial” system means the state doesn’t require a court hearing for a lender to foreclose. Instead, a notice must be posted in the county legal organ for four consecutive weeks before a foreclosure can begin.
Nonjudicial states clear out their inventory of foreclosed homes more quickly than those that have a judicial process, a fact some say helps the housing market overall. But in the nonjudicial process it can be harder to stop a problematic foreclosure or to have enough time to save your home, critics say.
Though he has never seen a state switch from a nonjudicial to a judicial process, or vice-a-versa, RealtyTrac vice president Daren Blomquist said states like Nevada and California — which also are nonjudicial — have adopted a Homeowner Bill of Rights that makes them look more like judicial states. Other states, with slower judicial processes, are looking for ways to fast-track their foreclosures. The states are about equally split between judicial and nonjudicial.
“It’s like the grass is greener on both sides of the fence,” Blomquist said.
The issue reached the state Supreme Court through a case brought by Suwanee homeowners claiming faulty documentation in their foreclosure. The court rejected their claim. But its ruling said the “continued ease with which foreclosures may proceed in this State gives us pause, in light of the grave consequences foreclosures pose,” while also noting it could not offer specific reforms.
Georgia Watch is pushing for what deputy director Liz Coyle said are minor “realistic and reasonable” changes to state law.
The group wants to lengthen the notice Georgia homeowners have that they are entering foreclosure to 90 days, from 30. That would give homeowners more time to explore options, while still maintaining a quick foreclosure timeline, Coyle said. Georgia Watch also wants to prevent foreclosures while a homeowner is still being evaluated for loan modifications or other relief.
Georgia Watch’s proposal would also require mortgage servicers to properly evaluate requests for relief, and would allow homeowners to seek a court injunction to stop a foreclosure when they believe the mortgage servicer has violated the law. Now, homeowners can get a monetary reward if a foreclosure happens improperly, but there is little they can do to save their home.
“I do hope the legislature will take action,” Coyle said. “Even though, thank God, the rates of foreclosure are down significantly, they’re still too high.”
There were 51,003 foreclosure notices filed in 2013, according to Equity Depot, down 44 from 2012.
Crosby, the Senate banking chair, said he is willing to “take a look” at any legislation presented. But he said he’ll be surprised if anything related to foreclosures became law this year.
State Rep. Greg Morris, who chairs the House Banks and Banking Committee, said he thinks the legislature should show restraint. He applauded the Supreme Court for putting the decision as to whether to act in lawmakers’ hands.
“Today’s solution is tomorrow’s problem,” said Morris, R-Vidalia. “We didn’t have a problem before the crisis, and I don’t think we’re going to have one after the crisis. …We should not try to solve a problem that’s not there.”
The state’s process is not too easy, Morris said, and community banks — which were also battered during the crisis — don’t need any other pressures as they try to recover. While there have been problems and abuses in the foreclosure process, Morris said, he thinks Georgia’s improving economy has fixed most of the issues that led to the crisis.
“We have to measure what problem are we solving,” he said. “Maybe the cure is worse than the disease.”
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