Foreclosure relief came to thousands of South Carolina residents yesterday after the state’s highest court put the brakes on certain pending foreclosure sales, the AP reported.
Specifically, the injunction prevents judges from finalizing foreclosure sales on properties backed by Fannie Mae and Freddie Mac, along with any other loan servicer signed on with the Making Home Affordable program.
The action is intended to give struggling homeowners more time to see if they can obtain assistance via the new program, which was just recently launched.
A number of banks and mortgage lenders, along with Fannie Mae and Freddie Mac, had extended foreclosure moratoriums in anticipation of the plan, but many of them expired within days or weeks of the program’s release.
The ruling came in response to a request from a Columbia-based attorney representing Fannie Mae who argued that foreclosure sales are sped up in South Carolina because of a state law that allows judges to restart the process if it takes too long, potentially shutting eligible homeowners out of the loan program.
The lawyer only requested that the court address roughly 1,000 South Carolina homes facing foreclosure, but state Supreme Court Chief Justice Jean Toal expanded the moratorium to all foreclosures backed by Fannie or Freddie.
Toal set a May 15 deadline for plaintiffs in foreclosure actions to alert other parties if the loan is subject to a loan modification under the program.
If a borrower is eligible for assistance, the foreclosure proceeding will remain on hold; those not eligible will head back toward foreclosure.
Interestingly, it appears to be the first court-ordered statewide foreclosure moratorium.
I wouldn’t be surprised if other states take similar action, though only time will tell.