South Carolina's chief justice orders halt to all pending foreclosures for second time in two years to allow parties to complete an intervention process

COLUMBIA, South Carolina , May 3, 2011 () – For the second time in two years, South Carolina's chief justice on Tuesday ordered a stop to all pending foreclosures until the parties involved can complete an intervention process -- a move with the potential to affect thousands of people struggling to hold onto their homes.

The injunction, which applies both to foreclosures still pending on May 9, as well as any filed after that date, is intended to give homeowners a chance to mitigate their losses, modify their loans and potentially alleviate the already strained court system processing the cases, Chief Justice Jean Toal wrote in the order.

"The number of unresolved foreclosure actions has increase, with a resulting burden on the resources of the Court before which the action is pending," Toal wrote. "The trial courts report that such breakdowns are largely the result of difficulty in communication between lender-services and debtors, and the fact that foreclosure actions are proceeding to conclusion without regard to ongoing loss mitigation efforts by the parties."

In 2009, she ordered South Carolina judges to stop finalizing foreclosure sales on thousands of properties guaranteed by Freddie Mac, Fannie Mae or any other mortgage company that had signed on to a federal assistance program, saying she wanted to give homeowners time to take advantage of the help.

Two weeks later, Toal replaced the injunction with procedures to ensure foreclosures were handled uniformly.

Since those actions, South Carolina's foreclosures have continued to increase.

In her order Tuesday, Toal said that no foreclosure hearings or sales may be held until an attorney for the lender has completed a list of duties, including ensuring that the homeowner has ample opportunity to try to modify the loan to agreeable terms.

A 90-day waiting period follows any agreement reached between the parties. After that, the lender will either dismiss the foreclosure action entirely or, if the homeowner has broken the agreement, pursue the foreclosure.

It was not immediately clear how many homes will be affected by Toal's order. In South Carolina, more than 23,500 homes were in some stage of foreclosure in March, according to RealtyTrac Inc., a foreclosure listing service in Irvine, Calif.

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