Long foreclosure processing period benefits no one, experts say
As reports have noted, the time it takes to process a foreclosure varies from state to state, and New York and New Jersey have some of the longest average processing times in the nation. While some observers have said the relative delays is good for borrowers — they have time to get back on their feet financially — new evidence shows it may not be good for their neighborhoods overall, the New York Times reported.
Unlike in some states, in New York and New Jersey a foreclosure must go through the court, which, while it may assure fairer outcomes, has created a massive backlog of properties awaiting foreclosure. Recent studies have shown that buyers in states with judicial foreclosure proceedings were no less likely to eventually have the home repossessed than in other states.
“The best outcome is to prevent the foreclosure,” Paul Willen, an economist and policy adviser at the Boston Fed, told the Times. “But if it’s clear that can’t be done, it’s in society’s interest to get the foreclosure done as soon as possible.
Neighborhoods where foreclosures languish also suffer, experts noted.
“Borrowers should be considered quickly for loan modifications,” Michael Calhoun, the president of the Center for Responsible Lending, told the Times. “They’re more successful if they’re done early on.” [NYT] –Guelda Voien