Lenders seeking to foreclose on a home must provide better disclosure on who owns the mortgage and list the contact information for people who can negotiate with borrowers under a recent ruling by the Georgia Court of Appeals.
The Atlanta Journal-Constitution reports that July 12 decision applies to foreclosures that happened from 2008 to 2011, though some lawyers say it may have consequences for ongoing foreclosures.
Lawyers representing borrowers had argued that banks were not complying with a state law changed in 2008. In its decision, the appeals court found the law requires that foreclosure notices and legal advertisements include the name of the mortgage owner and the contact information for the owner or someone else authorized to negotiate a modification, short sale or other relief. The court decided that foreclosure notices must also reflect whether it was sent by the creditor or someone acting on the creditor's behalf.
The ruling could still be appealed to the Georgia Supreme Court.
Figuring out who actually owns a mortgage can be difficult because lenders can sell their mortgages to other firms that handle the paperwork in the foreclosure process.
"A debtor has a right to know which entity has the authority to foreclose, and there should be no confusion about the identity of that entity. The practical ramifications are troubling if it were otherwise," the court said in its opinion.
Attorneys for borrowers said the decision could be used to provide delinquent borrowers with more time until lenders fix the notification process. The decision will not reverse completed foreclosures, but banks could face damages if their foreclosure notices did not comply with the law.
"The real damage (of a faulty foreclosure) notice is the homeowner is robbed of a chance to speak to the only entity that can do anything about the foreclosure," borrower attorney Ryan Strickland said.
Several mortgage companies and law firms specializing in foreclosure said they were still evaluating the decision. Georgia Bankers Association spokesman David Oliver said the legal issues were technical.
Lawyers said that mortgage holders may still be violating the disclosure rules. For example, The Atlanta Journal-Constitution examined 200 notices published in the July 23 edition of The Daily Report, where the county publishes legal notices. The newspaper reported that nearly 75 percent of those ads did not list the contact information for someone who could negotiate with a delinquent homeowner.