Over the past few years, the nation has been hit with a record number of home foreclosures. In an attempt to keep up with this large backlog of foreclosures, some banks - including several major financial institutions/mortgage lenders - approved foreclosures without following the appropriate procedures.

This failure to follow the rules prompted courts in several states to initiate a stricter system of checks and balances, meaning greater judicial oversight before a foreclosure can be completed.

For example, in the state of New York, attorneys are now required to affirm that they personally reviewed/confirmed the accuracy of all foreclosure documents. In addition, the lenders whom these attorneys represent are also now required to review/confirm the accuracy of these documents.

Interestingly, this stricter judicial oversight has resulted in a substantial backlog of foreclosures in many states.

According to a recent news report, there are currently 2.1 million homes in the United States currently in foreclosure or with seriously delinquent mortgages.

However, if the state courts with stricter judicial oversight continue to process foreclosures at their current rate of speed, it may take several decades to clear out their respective foreclosure markets.

To illustrate, in New York and New Jersey, two states where the courts are actively involved in the foreclosure process, it will now take over five decades to clear the current foreclosure backlog.

(Here in Texas, it would take roughly four years.)

One potentially troubling side effect of the current foreclosure backlog is its effect on the real estate market.

Specifically, many buyers and investors may hold off on purchasing a new home for fear that real estate prices will once again plummet if the backlog of delinquent home mortgages is cleared, but once again grows after another round of stalled foreclosures finally clears the state courts.

Stay tuned for more from our San Antonio bankruptcy blog ...

Regardless of your financial situation, contact an experienced legal professional to learn more about foreclosure, or your rights under Chapter 7 bankruptcy or Chapter 13 bankruptcy.

This post is for informational purposes only and is not to be construed as legal advice.

(Please note: The firm handles only bankruptcy matters and is not involved in any pending class action lawsuits against banks/mortgage lenders. We take pride in reporting matters that are important to our community.)

Source:

USA Today, "Foreclosure backlogs could take decades to clear out" Nov. 7, 2011