Partner Todd E. Soloway, Chairman of Pryor Cashman’s Real Estate Litigation Group, was interviewed by The Street for its November 30, 2012 article, “New York, New Jersey Foreclosure Delays Threaten Housing Rebound.” According to the article, economists at the New York Federal Reserve believe an increasing backlog of foreclosure cases are threatening the housing recovery in New York and New Jersey.

The backlog is partially a result of the judicial foreclosure process adopted by the states, where the bank is required to prove in court that the borrower is in default in order to foreclose. New York and New Jersey are among the 26 states with court-processed foreclosure procedures.

Additionally, Fannie Mae and Freddie Mac are proposing to raise guarantee fees in five states which the agencies believe have higher foreclosure costs due to their legal process, including New York and New Jersey. If implemented, the proposal could lead to a rise in mortgage rates.

Soloway told The Street that while the majority of the borrowers do end up losing their home to foreclosures anyway, the courts ensure a sounder financial system. “The judicial process puts the onus on bankers to make sure everything is in order. Ultimately it would benefit both the borrower and the lender. It will not only keep the borrower in their homes, but also force lenders to be more responsible in their lending.”

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