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Ohio cracks the whip on bank foreclosure filings

Dennis Murray (D-Sandusky) introduced House Bill (HB) 323 to Ohio’s House of Representatives. This bill on the draconian side for banks. It would require a brisk time line for banks to move a home from foreclosure court filing to bringing it to sheriff sale… if they don’t follow the time line apparently the lender will have the mortgage liens removed from the property and lose any rights to the proceeds of the sale of the property.

Not only are there time lines to follow but the lender will also have to file several extra documents including a form that gives the details of who exactly owns the note and an affidavit showing that the bank has inspected the property, has attempted to contact the owner by telephone and has sent letters to the borrower.

Get more details here.

Is this a good policy?  My conservative tradition argues against all the extra regulation.  Some would even argue if being so quick to take away a banks ownership interest is even constitutional.  I for one am not a constitutional expert.  However to the communities that are being ravaged by bank foreclosures, this could be a tool to help save them from banks, who will start a foreclosure but just walk away from the foreclosure when they realize the property is in bad condition. Banks that do this can put a property in limbo for years. It’s not free to be sold and renovated.  Its might be in to bad of condition to be lived in.  So it just sits there blighting a neighborhood.

From a short sale and loan work out perspective I think there is a possibility that this could give homeowners leverage against their lenders.  I have noted in previous blog posts that servicers often do not have a financial incentive to work with borrowers even though it makes financial sense to all the other players (i.e. borrower, note holder, local communities) for a work out to be made.  This law could significantly increase the complexity, risk and expense of foreclosing in Ohio making loan workouts much more desirable alternative.

Andy Morris is an Ohio real estate broker with an expertise in selling homes on a short sale.  If your Ohio home is heading towards foreclosure or you owe more than your property is worth, please call Andy at 888-4-STOP-IT  to see if you qualify for a short sale with your lender.

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