Five sates with the most drawn out foreclosure process, including New York, would see government-backed mortgage fees increase under a new proposal by the Federal Housing Finance Agency, which oversees Freddie Mac and Fannie Mae.
The proposal has home loan borrowers in those states paying a one-time fee of 0.15 percent to 0.3 percent for federally backed mortgages starting in 2013, Bloomberg News reported.In addition to New York, New Jersey, Connecticut, Florida and Illinois are the states that could be affected by the proposal. These areas mandate court involvement in foreclosure cases and have some of the longest processing times, rendering those loans more expensive to foreclose upon.
But the plan has so far been met with political opposition. New Jersey Senator Robert Menendez called the plan “outrageous.”
“After banks preyed on homeowners with subprime loans and improper foreclosures,
FHFA now wants to penalize homeowners in states that have strong consumer protections to stop banks from wrongfully foreclosing,” Menendez said.
In New York it takes 820 days on average for a foreclosed property to reenter the market, while daily carrying costs are 112 percent of the national average. Compare that to Virginia, the state with the fastest turn around for a foreclosure, where it takes 270 days on average for a property to get back onto the market and carrying costs are 13 percent lower than the national average. In April, Brooklyn became the area with the longest foreclosure process in the nation.
The FHFA is currently hearing public comments on its proposal over the next two months. [Bloomberg] — Christopher Cameron