Will Your State Be Punished for Taking Foreclosures to Court?
In the near future, nearly half of the United States could experience increased mortgage fees. Ed DeMarco, acting director of the Federal Housing Finance Agency (FHFA), announced a proposal to change its standard practice of treating all states equally by creating a new mortgage fee structure that varies by state. The way it works is that you will be charged increased mortgage fees when purchasing a home if you live somewhere that uses the judicial system to process its foreclosures.
DeMarco's reasoning for the proposal is that foreclosures settled in court cost the FHFA more time and money than foreclosures that are settled outside of court. By padding mortgage costs up front, he claims he's reducing FHFA's risk. Unfortunately, this complex fee structure misses the target. It will not save time or money or serve as a deterrent to servicers who pass the cost on to homeowners. Rather, it acts as a penalty for states that provide a judicial outlet for grievances between homeowners and lenders.