This article first appeared in the St. Louis Beacon: August 22, 2008 - What a difference a river can make for homeowners facing foreclosure.
For residents of Illinois, a judicial foreclosure state, the legal process can take nearly a year because it is administered through the courts. In Missouri, the process can take as few as 60 days because the majority of foreclosures are nonjudicial, completed without going to court but in accordance with state law and the terms of the mortgage.
Most Missouri residents who lose their homes to foreclosure never have an opportunity to tell their side of the story to a judge - unless they are being evicted, housing counselors point out. In states where court action is required, the process is considerably slower. That slow-down gives financially distressed homeowners more time to find a solution, such as working out a loan modification with their lenders, making up missed payments, selling the property or declaring bankruptcy.
"The process in Missouri doesn't give people enough time to figure out what happened, or how to stop it,'' said Julie Terbrock, legislative director for Missouri ACORN. The St. Louis office of ACORN is one of five local nonprofits offering free counseling to at-risk homeowners through the St. Louis Alliance for Homeownership Preservation.
Missouri and Illinois
The foreclosure process varies by state. Foreclosures are administeredby the courts in about half of the states. Foreclosures take the leastamount of time in Texas, a nonjudicial state, where the process can becompleted in 27 days. In New York, a judicial state, the processaverages 445 days.
Average foreclosure process period | ||
Missouri | Non-judicial | 60 days |
Illinois | Judicial | 300 days |
Source: Federal Reserve Bank of Kansas City and Realtytrac.com | ||
Terbrock said that Missouri legislators could help homeowners by taking action to slow the foreclosure process. Such remedies might include a mandated arbitration between a lender and borrower or a temporary moratorium on foreclosure action that would give homeowners a period of three to six months to work with housing counselors.
"It would slow down a process that in Missouri is virtually overnight," Terbrock said.
Housing counselors urge borrowers to act immediately if they even think they will have a problem with their mortgages because missing one payment can place a homeowner at risk. While lenders say they are willing to negotiate, it usually takes many hours on the phone and fax machine to connect with the people who have the power to accept a loan modification, Terbrock said.
All too often homeowners lose their homes to foreclosure without getting the help that was available to them, said Eric Madkins, director of housing and foreclosure intervention for the Urban League of Metropolitan St. Louis.
"Or, by the time they find out about it, it's already too late,'' Madkins said.
At some point in the process there should be a mechanism to ensure that homeowners have received guidance from a professional, Madkins said. Such counseling could avert foreclosure, or at the least, lessen the consequences of the aftermath.
Ironically, the sheer volume of foreclosures has slowed the process somewhat because the lending institutions are overwhelmed, Madkins said. He added that homeowners shouldn't count on a delay to give them more time.
Legal Services of Missouri provides an easy-to-understand explanation of the state's foreclosure process under the consumer law heading on its website at www.lsmo.org. Homeowners might be surprised to find, for example, that foreclosure proceedings can begin when they are just 10 days late with their payments. Because lenders don't need to file a lawsuit to foreclose, they go to court only in rare cases, when there is some technicality. Lenders are required to send just one letter by certified mail notifying the homeowner of the date the property will be sold, but must publish notices of a foreclosure sale in a newspaper published in the county in which the home is located.
Illinois residents can find a useful consumer brochure titled "What happens if you are sued for foreclosure in Illinois'' written by the Self Helf Legal Center of the Southern Illinois University School of Law under the Property section at www.law.siu.edu/selfhelp/ .
