A recent report by the Department of Housing and Urban Development Office of Inspector General (HUD) uncovered unnecessary delays in foreclosure and conveyance on the part of mortgage services. These delays have proved costly for the Federal Housing Administration (FHA). To be more specific, HUD found that its offices paid claims for 239,000 properties, ultimately costing the FHA an estimated $2.23 billion.
To determine the losses for the FHA from these missed deadlines, HUD selected 90 of approximately 250,000 claims it received from loans which were likely to miss deadlines. These claims dated back 5 years, and of them, 89 had missed a deadline for either foreclosure or conveyance — and sometimes both. Taking this data into account, HUD determined that 238,978 claims were likely paid out due to late actions by servicers.
Missed deadlines ranged from initiating and finalizing foreclosure, to securing and delivering the properties to HUD. This range is likely tied to the fact that one missed deadline tends to create a domino effect, where other deadlines are missed further along in the process. Foreclosure initiations were late for 56 of the homes sampled in the report, by an average of 419 days. By the end of the process, the 87 homes that had missed conveyance deadlines had been late 495 days. However, some loans fared far worse, the the longest delay clocking in at 1,896 days late.
In light of this news, HUD will reportedly enforce a maximum time period for filing claims beginning early next year. In doing so, it hopes to avoid paying out unnecessary funds for servicers who abuse the set time frames. This is clearly good news for the FHA, but it’s also favorable for homeowners, though perhaps not at first glance. The maximum time limit will serve to enforce structure to the foreclosure process, which is key to ensure lenders do not leave debtors in legal limbo.
If you have questions about foreclosure, a Miami foreclosure defense attorney at Graham Legal is always here with answers. Call our office today for a free consultation.