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No Trial For Foreclosures in Georgia

No Trial For Foreclosures in Georgia

With Georgia currently ranking 7th in the nation in foreclosures, this issue couldn’t be more relevant for Georgians right now, and we think it’s important to keep you up-to-date with all the latest foreclosure happenings.

The following article was found on, and the problems addressed in it, give you yet more reasons to avoid the foreclosure of your home by either filing for bankrupcty, or staying out of debt all together.

Georgia’s No-Trial Foreclosures Mask Problems, Critics Say

As controversy clouds foreclosure practices nationwide, only a few instances of paperwork problems have been reported in Georgia. That doesn’t mean they aren’t happening, critics of the state’s foreclosure process say.

Georgia is one of 27 states that do not require any court hearing for a lender to complete a foreclosure — and it is in court where bad documentation by so-called “robo-signers” has been found in other states. The difference between the process in Georgia and states requiring court hearings has been brought to the fore by the foreclosure scandal that erupted last month, when national lenders briefly stopped repossessing homes because of instances of shoddy documentation. Lending industry insiders say any problems in Georgia are isolated and that the state’s “non-judicial” system works for lenders and borrowers alike. Homes are foreclosed because borrowers are in default, said Georgia Bankers Association chief Joe Brannen. “The problem is folks aren’t able to pay their mortgages,” he said, adding the current system encourages work-outs.

Consumer advocates say it’s impossible to determine the scope of documentation problems in Georgia because no one polices it.

“The greatest deficiency (in Georgia law) is the lack of any impartial judicial oversight,” said Frank Alexander, a professor of real estate finance at Emory University School of Law. Last week, an Atlanta lawyer sued a bank-owned mortgage database used by lenders to track loan ownership, alleging it has no basis under Georgia law to conduct foreclosures. Georgia ranked seventh in the nation for foreclosures in the third quarter, according to RealtyTrac. One in every 98 households was involved in some form of foreclosure proceedings, up 8.3 percent from second quarter and up 23.5 percent from the same period a year ago. Earlier this month, outgoing Georgia Attorney General Thurbert Baker joined his counterparts from 49 other states in an investigation of the big mortgage holders and their foreclosure actions. The national documentation furor followed cases in other states in which bank employees trying to quickly process foreclosures falsely swore they had personal knowledge of particular cases. Some admitted signing hundreds of documents without knowing the content, and signatures on some filings were fraudulent. But in those states, the false or questionable affidavits were discovered in a trial. In the 23 states that require lenders to sue borrowers to foreclose, a court hearing puts the burden of proof to foreclose on the mortgage owner or an agent on its behalf. Judicial foreclosures are allowed under Georgia law. But most mortgage lenders have homeowners waive their rights to one during the closing process. Mortgage holders or their agents only need assert — not prove — that they have the right to foreclose, a very big difference, according to Alexander. “There’s no forum for the debtor to say, ‘Prove it,’ or the lender to say, ‘I can do it,’” Alexander said.

Attorney David Ates last week sued the Mortgage Electronic Registration Systems, or MERS, a bank-owned mortgage database, saying foreclosures it has conducted are invalid under Georgia law. The suit seeks class-action status. Since the late 1990s, mortgages have been pooled by the millions and sold among investors as securities, and MERS was created to keep track their movement for banks. MERS has been sued repeatedly over the past few years, but the company defends its rights in foreclosure cases. Ates’ client, Dustin Rollins, was in default and his home was foreclosed on in August. MERS acted in place of the lender to sell his home to the highest bidder. Ates, who advocates for a judicial foreclosure, argues under Georgia law MERS can’t act in that fashion. “If you judicially foreclose you have to show the note,” he said. “A lot of [banks] can’t do it.”

MERS called Ates’ suite “groundless,” and spokeswoman Karmela Lejarde said: “The mortgage instrument states that MERS has the right to foreclose and sell the property. . . Courts around the country have repeatedly upheld and recognized this right.” John Bartholomew, an attorney at the Atlanta Legal Aid Society, said clients in a handful of cases have shown documents bearing signatures of so-called “robo-signers,” agents of lenders and mortgage services who have been identified in out-of-state cases of bad documentation. “It raises red flags that these files are being pumped through with little review,” Bartholomew said. Brannen, the bankers association chief, said a tiny number of problems do not justify an overhaul of the system.

In Georgia, lenders can foreclose in as few as 37 days, which is among the fastest in the nation. Industry officials say that figure is misleading, and that foreclosures take 241 days on average in Georgia from the date of last payment. The national average is 355 days. Brannen argues checks exist to ensure proper documentation, noting that lawyers for lenders swear an oath that documents are correct, and title insurance companies make sure a property’s title is clear. Also, borrowers can contest foreclosure proceedings in court or seek legal aid to negotiate with lenders, Brannen said. Foreclosure rates wouldn’t decrease if Georgia was a judicial foreclosure state, Brannen said. Rather, cases would drag out, delaying the economic recovery. But borrower advocates say the deck is stacked against their clients, many of whom have scant resources to defend themselves. Howard Rothbloom, a Marietta attorney, has represented borrowers who entered bankruptcy to fend off foreclosures. In a few cases, lenders were unable to prove they owned the loan, and in at least one, could not prove the borrower was in default, he said. “Every homeowner is entitled to due process,” Rothbloom said. “If (accused) criminals are guilty, why do we need to try them?”

How foreclosure works in Georgia:

  • Once a mortgage lender determines a borrower is in default, the lender or its agent can initiate a foreclosure.
  • A foreclosure attorney sends a letter to accelerate the full balance.
  • A certified letter warning of the foreclosure is sent 30 days before the sale date.
  • An ad is run in the county’s legal organ for four consecutive weeks before the foreclosure.
  • The property is sold on the courthouse steps.”

If you’re afraid of losing your home in a foreclosure, don’t hesitate to contact the Atlanta bankruptcy offices of The Adkins Firm!

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