In a recent Paper, Alan Mallach, Non-Resident Senior Fellow with the Metropolitan Policy Program at Brookings, "lays out a detailed, concrete series of steps by which the state can not only better help homeowners and tenants affected by foreclosure, but help stabilize its distressed neighborhoods and communities".

Following are several recommendations included in the Paper.

• Impose a $1,000 fee on all foreclosure filings (or certain categories of foreclosure filings, such as subprime loans), with the proceeds to be used principally to fund foreclosure prevention counseling programs and emergency assistance through the Home Rescue Fund.
• All foreclosure filings should provide clear and complete documentation of the plaintiff’s ownership of the note and mortgage, including an affidavit by plaintiff’s attorney that he or she represents and is authorized to negotiate on behalf of a responsible owner. With respect to securitized mortgages the documentation should include identification of the mortgage-backed security and not only the trustee.
• Require plaintiff to complete a mortgage origination fraud “screen”; that is, a series of questions about the origination of the mortgage being foreclosed, at the commencement of foreclosure proceedings, in order to enable thecourt to evaluate the possibility that fraud or misrepresentation occurred in the course of originating the mortgage.
• Offer borrowers of mortgages in foreclosure the opportunity for a six month forbearance period, during which time the foreclosure proceedings are frozen, in order to create a meaningful opportunity for mediation or other negotiations leading to loan modifications or refinancing.
• Require that plaintiffs file a statement of property condition, occupancy and asset value at the commencement of all mortgage proceedings.
• Require that the entity initiating a foreclosure on a residential property be legally responsible for maintenance of the property in the event that the title-holder vacates the premises at any point after the initial foreclosure filing.
• With respect to code enforcement, nuisance abatement and receivership costs incurred by municipalities on properties in foreclosure (1) provide that these liens have priority and can be foreclosed upon directly by the municipality or added to the tax duplicate; (2) require that any unpaid lien amounts must be paid by buyer at sheriff’s sale; and (3) allow municipalities recourse against other assets of the owner and/or entity initiating the foreclosure.
• Eliminate foreclosure as legal grounds for eviction of a sitting tenant who is otherwise in compliance with her legal obligations as a tenant.
• Allow former owners who are still occupying the premises at the time of sheriff’s sale, and have adequately maintained the property, to remain as tenants, paying the new owner a fair market rent.
• Establish a fast-track procedure to expedite foreclosure of properties that have become vacant subsequent to the initiation of foreclosure proceedings.
• Permit local government to “step into the shoes” of lenders who fail to initiate foreclosure after an extended period of default or who initiate foreclosure but abandon it after initial filing.
• Create a uniform statewide mortgage and foreclosure data and reporting system, and provide the data in a publically-accessible, user-friendly web-based format.

To view the Paper in its entirety, please click here.