Foreclosure halt may have lasting impact on local homeowners

SALT LAKE CITY — Three of the nation's largest mortgage lenders have halted property foreclosures in many states — including Utah. Bank of America, GMAC and JPMorgan Chase suspended foreclosures while each institution reviews the handling of thousands upon thousands of mortgage documents following allegations of possible mortgage fraud.

How the foreclosure freeze will impact Utah homeowners is uncertain. The Beehive State ranks among the top 10 states in rate of foreclosures, according to RealtyTrac — an Irvine, Calif.-based market research firm.

A Utah home loan specialist said while the freeze may buy some homeowners some extra time, it probably won't be enough to resolve the problem of rampant foreclosures.

"It's more of a P.R. stunt," said Gregory Mauer, executive director of the National Home Retention Advocacy Program — a for-profit housing counseling organization in Draper. "Definitely some changes need to be made in the state of Utah, unfortunately that change isn't going to be fast enough for a lot of the homeowners we have now."

Mauer suggested that property owners facing foreclosure contact their bank to review possible options that could prevent them from losing their homes.

Another local housing specialist said the ramifications of the freeze could be huge for many property owners.

"It's going to have a big impact on a lot of people who may have already lost their homes, but shouldn't have, because they didn't look at the documents carefully," said Ryan Carver, director of housing counseling for AAA Fair Credit Foundation — a nonprofit housing agency based in Salt Lake City.

Carver said Bank of America services 20 percent to 25 percent of all mortgage loans in the country, which makes the potential influence of the freeze very significant.

"The fact they have (frozen) all foreclosure activity in all 50 states … is a little bit of (good and bad news)," he said. "It buys some people some time, but it also could be negative because it could create a backlog … for all those people who are trying to avoid foreclosure."

He said the volume of loans that have to be reviewed and others that have requested modifications to prevent foreclosure will likely grow dramatically during the moratorium, creating another potential problem.