South Carolina homeowners facing foreclosure are enjoying a brief reprieve, but it remains uncertain how many will ultimately work out deals with their lenders to hang onto their homes.
People involved in the process said it's too early to tell how S.C. Supreme Court Chief Justice Jean Toal's May 2 order, which temporarily halts foreclosures on owner-occupied homes, will affect the torrent of foreclosures in Beaufort County.
The county had the second-highest foreclosure rate in the state in the second quarter of 2011, according to RealtyTrac, a California firm that compiles such data.
Jim Scheider, an attorney at Vaux & Marscher of Bluffton who defends people from foreclosure, said the order is giving local homeowners the chance to enter a foreclosure intervention program. He said lenders were reluctant to grant participation in such programs before the order required it.
He called Toal's order "a great tool for the debtors."
Under the order, attorneys for lenders who want to foreclose are required to certify that the borrower was notified of the right to seek a loan modification, had a fair opportunity to respond and that the lender received and examined all documents and records required from the borrower to evaluate eligibility for foreclosure intervention.
They could also certify after 30 days that the borrower refused to participate. Only then could foreclosure proceed.
The order remains in effect until Toal amends or rescinds it.
Before the order, Scheider's clients inquired about foreclosure intervention "over and over and over again" only to find lenders unwilling to listen.
Now, he estimated the firm is working with 25 to 30 homeowners. All have used the order's procedures to tell lenders they want foreclosure intervention, he said.
Many of his clients have yet to receive instructions from their lenders about how to proceed, and they still might not wind up with the mortgage modification they seek. But he said they at least have a better shot at keeping their homes.
"Judge Toal's order really changed the landscape," he said.
When Toal issued the order, some observers speculated its impact would be limited in coastal areas where there are fewer owner-occupied homes, and more second homes and investment properties that are excluded from the order.
Judge Marvin Dukes, who rules on foreclosures as Beaufort County master-in-equity, said Thursday there's "definitely been a reduction" in foreclosures since the order.
Initially, he said, some lenders even refrained from foreclosing on unoccupied homes -- which are not affected by the order -- to make sure they didn't risk violating it.
Lenders should soon resume foreclosing on eligible homes for which deals couldn't be struck, but Dukes hopes some people can use the order to successfully avoid foreclosure, which would boost the entire economy.
"Everyone would benefit if some of these work out," he said.
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- Foreclosure halt expected to have little effect in Beaufort County, local experts say, May 9, 2011
- The order