In Georgia, Illegal Foreclosure Practices Go Unnoticed, Part One

We’ve repeatedly discussed the ongoing investigation into illegal foreclosure practices and the resulting uncertainty that continues to affect homeowners across the country. However, in all of the chaos, little has been said about the 27 states in which foreclosures do not require judicial oversight, of which Georgia is one. Critics and consumer advocates say that this mass inattention could be harming Georgia homeowners who lack the means to contest an unlawful foreclosure.

Last month, lenders were called out over widespread “robo-signing”, which refers to the practice of lender employees signing foreclosure documents with little to no knowledge of the contents of the documents. This practice is illegal in all 50 states, but was only discovered through the court proceedings of the 23 states that require judicial approval of foreclosures. In the 27 other states, including Georgia, only a few occurrences of such abuse have been discovered.

According to Emory University Law Professor Frank Alexander, there is no way to accurately determine the scope of Georgia’s documentation problems because no one polices it. “The greatest deficiency in Georgia law is the lack of any impartial judicial oversight,” he said. “There’s no forum for the debtor to say, ‘Prove it,’ or the lender to say, ‘I can do it’.”

The ease of the process appears to have had an effect on the rising number of Georgiaforeclosures: in the third quarter of 2010, Georgia ranked seventh in the nation for foreclosures, with one in every 98 households in the state involved in foreclosure. This is a 23 percent rise from the same period just one year ago.

However, lending industry officials say that the current system encourages homeowners and lenders to work out foreclosures without resorting to the court. According to Georgia Bankers Association Chief Joe Brannan, foreclosures occur for one simple reason: homeowners are in default. “The problem is folks aren’t able to pay their mortgages,” he said.

We will continue this discussion later in the week with a look at homeowners’ ability to defend themselves against foreclosures in Georgia.

Source: The Atlanta Journal-Constitution, “Georgia’s no-trial foreclosures mask problems, critics say”, J. Scott Trubey, 27 October 2010