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United Trustees Association Warns Foreclosure Regulations Will Hurt …

IRVINE, CA, Jun 28, 2012 (MARKETWIRE via COMTEX) –
The United Trustees Association (UTA), whose members serve as
trustees under deeds of trusts (i.e., mortgages), today warned that
stringent, nonjudicial foreclosure regulations being considered in
California’s legislature could stifle the state’s housing-market

Targeting lenders and a range of mortgage service providers,
including trustees under deeds of trust, the proposed California
Homeowner Bill of Rights “will ultimately harm, not help, the vast
majority of California homeowners,” according to a new study by
Beacon Economics LLC addressing the state’s foreclosure crisis.

“California’s fragile housing recovery cannot withstand new
regulatory and legal hurdles which could have unintended
consequences,” said T. Robert Finlay, UTA president. “Beacon’s study
reveals that California’s nonjudicial foreclosure model is actually
working, allowing for a faster turnaround than might otherwise be
possible. It would be prudent to more strictly enforce and improve
the current process than to succumb to layers of new policies driven
by politics.”

Led by noted economist Christopher Thornberg, the Beacon study
concluded that the Homeowner Bill of Rights overreacts to a market
that is showing signs of recovery independent of new government
intervention. Specifically, the study concluded the following about
California’s housing market:

        --  The worst may be over. The number of distressed mortgages is down
            significantly from its high of three years ago.
        --  New legislation would reduce home values. The study finds that housing
            markets with longer foreclosures periods result in greater discounts
            on foreclosed units when banks eventually sell them driving real
            property values lower.
        --  Increased losses among mortgage lenders will result in higher down
            payments, tougher credit standards for credit-worthy consumers and an
            even slower market recovery.
        --  There is no evidence that states with longer foreclosure processes
            have a greater percentage of loan modifications or fewer delinquent
            borrowers in foreclosure. The study suggests that the opposite may be
            true. Longer foreclosure periods encourage more homeowners to default
            on their loans, knowing that they can live in their property rent free
            for a longer period of time.
        --  The proposed California legislation is misdirected. The study suggests
            that the focus should be on preventing a future breakdown in credit
            standards, not condemning the current foreclosure process.

To reinforce its points, the study contrasted housing-market outcomes
in states with judicial foreclosure and nonjudicial foreclosure
processes, and cited a 2011 report stating that foreclosure timelines
are at an all-time high — 692 days in judicial states and 567 days
overall. The longer the foreclosure period, the greater the discount
on foreclosed units, the report concludes.

Housing market outcomes in two of California’s neighboring states,
Nevada and Arizona, both hit hard by unemployment, highlight this
trend. According to the seasonally adjusted Home Price Index by
SP/Case-Shiller, the value of residential real estate in Phoenix –
governed by Arizona’s unchanged nonjudicial foreclosure process –
grew from 103.33 in January 2012 to 108.51 in March 2012. In Las
Vegas, where the Nevada Legislature has added numerous layers to its
nonjudicial foreclosure process since 2009, the index increased less
than 1 point — from 90.15 to 90.75 — during the same period.

“Industry data shows that the more complicated the foreclosure
process becomes, the more that delays and cost increases can
compromise the housing market, and ultimately hurt consumers and the
economy,” said Finlay. “The delay in foreclosing caused by additional
regulation can also add to neighborhood blight as houses sit in
foreclosure for longer.”

The UTA believes that lawmakers’ misunderstanding about the current
foreclosure protocols is driving some of the nonjudicial foreclosure
proposals in the state legislature. It pointed to a critical report
published in February 2012 by the City and County of San Francisco’s
Office of the Assessor-Recorder. The UTA subsequently audited the
report, finding significant discrepancies between the findings in the
assessor-recorder’s report and actual documents recorded with his
office. In many instances, the UTA found no errors where the
assessor-recorder’s report claimed there were many.

About the UTA
Founded in 1968, the United Trustees Association (UTA)
is a member-based organization serving professionals — including
trustees, attorneys and loan servicing professionals from title
companies, financial institutions, law firms and independent
companies — acting as trustees under real property deeds of trust.
UTA Members are current on relevant case law, attend the best
educational meetings and trade shows in the industry, and
collectively advocate before state legislatures. For more
information, please visit , or contact
Executive Director Richard Meyers at (949) 260-9020, or

        Greg Jones
        (916) 934-3484
        Email Contact

SOURCE: United Trustees Association

Copyright 2012 Marketwire, Inc., All rights reserved.

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