Fast Process Increases Texas Foreclosures

Texas’ swift foreclosure process is not helping residents to find a cure for their mortgage problems, says government officials and housing counselors.

According to 2006 data collected by the Texas Department of Housing and Community Affairs, Texas has the most fast-track process, taking only 41 days to complete, with homeowners being given only 20 days before foreclosure starts. The law has been effect since 1984. Other states meanwhile, give residents as much as four months.

Increasing Texas foreclosures has caused state Attorney General Greg Abbot to push for legislature giving residents a 45- day reprieve instead of 20 days. 11.5 percent of Texas subprime loans are within stages of foreclosure, up 2.5 percent from the same period in 2007.

However, not everyone agrees on a law change. Texas Mortgage Bankers Association General Counsel Larry Temple says that the time given to distressed homeowners is reasonable.

Aside from this, foreclosure problems don’t seem to be letting up in states such as California and Nevada where the process takes a longer time. Even loan modification does not seem to help that much. A recent report by federal regulators shows that those who availed of loan adjustments during the early half of 2008 have fallen behind on payments.

The situation has housing experts to question which loan workouts actually help. Federal Deposit Insurance Corp. chairman Sheila Bair and office director of housing for Acorn Housing Dallas Sherry Randall agree that lenders are not adjusting loans enough. Another problem is that only those who are more than 90 days behind are given loan modifications. This has left those in the early stages of foreclosure in the dark.

Statewide Coordinator for the Texas Foreclosure Prevention Task force JoAnn Penning suggests that the state should increase efforts to disseminate more information and provide more resources to help homeowners. Changing policies, like Abbot’s proposal, are also a step in the right direction since this addresses the problem directly instead of just delaying the inevitable.