It sounds like the start of a lawyer joke, but in fact, it’s creating a “foreclosure holiday” for many homeowners in New York City: Last October, state chief judge Jonathan Lippman issued an order mandating that foreclosure lawyers sign sworn statements “certifying to the best of their knowledge [that] bank paperwork contained no false statements.” Since that time, foreclosures have dropped 59 percent year-over-year[1].

Of course, part of the slowdown is due to the fact that foreclosures in the system but lacking this certification had to be delayed or even rewound while the paperwork was obtained. In many cases, said paperwork also had to be corrected. However, according to one state attorney, “since the rules went into effect…she hasn’t seen a single filing of the affidavit for any of her clients trying to avoid foreclosure,” reported the Wall Street Journal. In fact, the same attorney noted that many clients are now in settlement conferences.

New York preforeclosure filings, also called lis pendens, have dropped as well. In fact, compared to January 2010, the volume is down 36 percent[2]. Do you think that the new legislation, which undeniably addresses a very real procedural problem with foreclosures, could ultimately help resolve the housing crisis more quickly?

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[1] http://online.wsj.com/article/SB10001424052748704858404576134333741564532.html?mod=googlenews_wsj

[2] http://ny.curbed.com/archives/2011/02/10/foreclosure_filings_drop_thanks_to_new_paperwork.php