Special to the Tri-State Defender

Usually, a homeowner who misses a mortgage payment has about 15 months before the home is sold at auction, according to Lender Processing Services Inc., which tracks mortgages.

Congressman Steve Cohen (center) speaks with Rep. Sheila Jackson Lee (D-Texas) and Memphis City Schools Board of Commissioner Dr. Kenneth T. Whalum Jr. during the House Judiciary Subcommittee hearing that Cohen chaired at the University of Memphis Cecil C. Humphreys School of Law on Monday (July 19). (Photos by Earl Stanback)

Mayor A C Wharton Jr. testified during the subcommittee meeting that focused on the fair housing lawsuit against Wells Fargo filed by the City of Memphis and Shelby County, bankruptcy issues as they relate to home foreclosures, and the foreclosure problem in Memphis from the viewpoint of academic researchers and community development organizations.

Tennesseans in trouble, however, are riding along the foreclosure fast-track. The typical foreclosure timeline is just two months in this state, Realtytrac, another group reports. Borrowers behind on their mortgage payments don’t have much time to come up with Plan B: a loan from a family member, a second job, or even a short sale.

Why? In many other states, judicial foreclosures are the norm. A company has to go to court to secure a writ of execution to sell a home. Then the home is scheduled for auction, a process that can that can take months. In Tennessee, out-of-court proceedings are most often used. A clause in a mortgage or deed of trust authorizes the lender to sell the property, if the borrower defaults. After the homeowner misses a payment, the trustee assigned in the deed of trust has the authority to begin the foreclosure process and advertise the property for sale.

U.S. Rep. Seven Cohen hopes to slow down the process and give more families time and opportunity to dig out of the financial hole. Cohen (D-Memphis) has introduced a bill that would provide grants so state and local governments can set up mediation between homeowners and mortgage companies, which is a crucial step in securing a loan workout or loan modification.

The Preventing Homeowners from Foreclosure Act also would help fund local outreach efforts to make distressed homeowners aware of the program and of special loss-mitigation tools that may help them save homes.

The homeowner-lender conferences seek to ensure that financial institutions are using the loss-mitigation tools put in place by the Treasury’s Making Home Affordable program, the U.S. Department of Housing and Urban Development, Federal Housing Administration and other entities, to help qualified homeowners stay in their homes.

In some cities, such as Philadelphia, these conferences are already required by law. No owner-occupied house may be foreclosed on and sold by the sheriff’s office in Philadelphia before a “conciliation conference,” a face-to-face meeting between the homeowner and the lender aimed at determining if special modification programs or loan workouts might be appropriate.  Homeowners in default receive counseling, and sometimes, free legal representation.

Realtytrac Inc. said nearly 528,000 homes were taken over by lenders in the first six months of this year, which means the nation may surpass last year’s bank repossession figure: 900,000 homes.