Breaking News-Foreclosures halted in S.C. !

Loans in program may see new deal

By Kristy Eppley Rupon

Several real estate professionals in the Myrtle Beach area said they understand the court’s decision.

"It’s always good if you can keep homeowners in their house," said Marvin Heyd, broker-in-charge of Myrtle Beach Prudential Burroughs & Chapin Realty. "If legislation is created to keep homeowners in their house and as a way for them to be able to refinance their mortgages, that would be great for homeowners and the housing industry. It would reduce the inventory going on the market … and get us back to a stable real estate market."

The decision halts legal proceedings on all homes undergoing foreclosure.

South Carolina has an estimated 6,291 homes in some stage of foreclosure, said Rick Sharga, senior vice president for RealtyTrac, a foreclosure listing service.

It’s unclear how many of the homes would be eligible for the federal restructuring program.

Freddie Mac and Fannie Mae, which requested the injunction, had suspended foreclosure proceedings nationwide through March to give lenders a chance to work with homeowners who might qualify for the program.

Greg Harrelson, owner of Century 21 The Harrelson Group, said with the current situation with the whole market, there is an imbalance.

"We hope this allows a lot of people to stay in their homes, but I’m worried we will still have to go through foreclosures again," he said.

South Carolina’s temporary suspension is designed to give servicers more time to evaluate homeowners’ circumstances before approving a modification.

"Doing a modification that’s not going to help the consumer doesn’t stop the bleeding; it just slows it down," Marcum said.

Studies have shown that as many as 50 percent of loans that are modified end up in foreclosure again, she said.

If a homeowner has lost all income and has no prospects for employment, they likely would not be approved for a restructured loan, she said. But if someone loses a job and has a spouse still working, they potentially could cut expenses enough to afford a reduced mortgage payment.

"A payment has to be factored into what the consumer can realistically pay," Marcum said.

The request for a ruling in South Carolina was because of an unusual state law.

Fannie Mae asked for the injunction in South Carolina, said spokesman Brian Faith, because the state has a rule that allows judges on a county-by-county basis to set aside foreclosure proceedings if too much time passes between a foreclosure judgment and a foreclosure sale.

Judges can make all parties start the process over from the beginning, which costs more for everyone involved, Faith said. He said South Carolina is the only state he is aware of that has this rule so Fannie Mae will not be seeking similar rulings in other states.

Dave Whitener, a real estate lawyer and adjunct professor at the University of South Carolina School of Law, said he had never heard of judges using that rule and that it doesn’t make logical sense since it would add extra work.

Whitener applauded the Supreme Court for taking the action to suspend foreclosures to give struggling homeowners extra time to work out a modification plan.

"Our Supreme Court is saying, ‘Let’s slow this train down until we make sure whether or not these people can be protected,’" Whitener said. "I think that’s very impressive."