Some homeowners able to delay, stop foreclosure

09.25.09
By James Conroy

An increasing number of people across the country are trying to stop foreclosure of their homes as they try to make ends meet during the economic downturn. Now, in a move that is delaying foreclosure for many homeowners, courts are requiring more accurate paperwork from the creditors attempting to seize homes.

The Huffington Post reports that in many cases, courts are either throwing out foreclosure cases or delaying them because creditors cannot prove they own the properties they are trying to take over.

According to the site, creditors need the original home note along with the mortgage in order to take control of the home, but often these documents are lost or filed improperly.

It appears that this problem hasn't just arisen from the current state of the housing market. A 2007 report by Katherine M. Porter, an associate professor of law at the University of Iowa, found that of the 1,733 creditors in the study who were foreclosing on homes, 40 percent did not show proof of ownership.

Indeed, some lawyers have known about creditors' problems in accessing the correct documents and have been able to hold off foreclosure proceedings for up to five years.

The Huffington Post says April Charney, a Florida-based lawyer, began arguing in some foreclosure cases in 2004 that the creditors did not have the right paperwork. Now she is attempting to get some of her clients full title to their homes, five years later.

Other problems are keeping homeowners in their homes for months despite foreclosure filings by creditors. The Wall Street Journal reported this week that legal problems and red tape have delayed foreclosures for many homeowners over the last two years.

While this might be good news for the people with a roof over their head, it is stalling the housing market, according to the Journal. This so-called "shadow market" of homes is expected to eventually hit the open market, which experts predict will create a glut of inventory.

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Many homeowners have been able to stop foreclosure or reverse it