After a pivotal court ruling last Friday in Massachusetts, lenders are likely to be more willing to help homeowners who are struggling to make their mortgage payments.
Last Friday, the Massachusetts Supreme Judicial Court ruled that two foreclosures in the case were invalid because the banks didn’t follow proper steps to show they had the authority to foreclose on the homes.
The case likely has set a precedent for the rest of the nation’s lenders to follow: Before you foreclose on a homeowner, make sure you have authority to do it.
“What banks are going to have to do is make sure they’ve dotted their I’s and crossed their T’s before going through with a foreclosure,” says Stuart Rossman, director of litigation at the National Consumer Law Center.
This could mean an even slower pace for foreclosures as banks take extra caution on their paperwork, says Roy D. Oppenheim, senior partner at Oppenheim Law in Weston, Fla.
Experts say the court ruling was a positive for homeowners who are in the middle of the foreclosure process, those trying to work out modifications, refinance, or do a short sale. They say that reaching a deal with lenders may become easier.
“I am expecting the banks to do fewer foreclosures and to engage in serious conversation in pre-foreclosure with borrowers,” Oppenheim says. “We’re already seeing [some] modifications that included for the first time principal reduction.”
Source: “Foreclosure Ruling May Be Good News for Homeowners,” MarketWatch