As reported in the New York Law Journal dated April 2, 2012, Volume 247 Number 62, there is a proposed Rule Change to be instituted by the Office of Court Administration and Unified Court System to deal with the “shadow docket” of foreclosure.  Apparently mortgage foreclosure law firms are filing foreclosures without filing either the required affidavit of service or affirmation executed by the attorney representing the mortgage lender.  This requirement was imposed in October, 2010.  Either of these filings would trigger a settlement conference in front of a judge or a judicial hearing officer.  The shadow docket was created by the failure of the mortgage company to file either of these documents.  If the affidavit of service is not filed within 20-days, or the judicial intervention form is not filed when the proof of service is filed, that will trigger the County Clerk to notify court officials to prepare either a motion to dismiss or schedule the required conference.  The proposed rule is currently in the “comment” period.

There are indications seen by some companies that track real estate data that foreclosures may accelerate in the year 2012.  For various reasons, foreclosures have slowed, particularly in 2011, despite the ever increasing time during which mortgage payments have not been made.

For home owners who have not been making their mortgage payments, the passage of time may ultimately make it difficult if not impossible for them to save their homes.  The ever increasing mortgage arrearage may climb to a point where neither a chapter 13 bankruptcy nor a mortgage modification may solve the issue.  In a chapter 13 bankruptcy, mortgage arrearage can be repaid to the bank throughout a five year bankruptcy plan, and the regular mortgage payments would resume during that time.  While it is understandable that a home owner would try to modify their mortgage, the longer the modification process continues, the arrearage continues to grow.  If after many months the bank refuses the modification, or proposes a modification that does not really help, the chapter 13 bankruptcy can be much more expensive because there would be higher arrearage number to repay.  It should also be noted that people with a second mortgage, that depending on the value of their home, a second mortgage can be completely eliminated in a chapter 13 bankruptcy.

The important thing is for a home owner who is behind on their mortgage to get good advice early on so that the home owner can fully assess their options.  Merely waiting it out while the bank takes no action can lead to an unsolvable problem regarding saving your home.

cited: US Foreclosure Filings Hit 4-Year Low in 2011

As reported in a cnbc article, foreclosures are at a 4 year low in 2011.  However, this number is artificially depressed according to real estate experts.  Some states have such a dysfunctional foreclosure process that it is bogging down housing foreclosures.  At Rodriguez & Doern, we have noticed that in New York State specifically with the conference program and the NYS judge on the foreclosure progress, this has elongated the average foreclosure from six months to well over a year. Although foreclosure filings may be down there is still a large amount of shadow listings, which is more delinquent mortgages and houses that are in pre-foreclosure status that have flooded the market and continue to keep the foreclosure process depressed.  As the article indicates even though foreclosures are down there are still a ton of properties which are delinquent.  We believe these are record levels.

cited: US Foreclosure Filings Hit 4-Year Low in 2011

As reported in a cnbc article, foreclosures are at a 4 year low in 2011.  However, this number is artificially depressed according to real estate experts.  Some states have such a dysfunctional foreclosure process that it is bogging down housing foreclosures.  At Rodriguez & Doern, we have noticed that in New York State specifically with the conference program and the NYS judge on the foreclosure progress, this has elongated the average foreclosure from six months to well over a year. Although foreclosure filings may be down there is still a large amount of shadow listings, which is more delinquent mortgages and houses that are in pre-foreclosure status that have flooded the market and continue to keep the foreclosure process depressed.  As the article indicates even though foreclosures are down there are still a ton of properties which are delinquent.  We believe these are record levels.