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SC Court Halts Foreclosures

The South Carolina Supreme Court has ordered a halt to all pending foreclosures so debtors and their banks can work out a plan to prevent home loss. The South Carolina Supreme Court is pushing the "pause" button on foreclosures because of a widespread "breakdown" in communication between homeowners and their banks. Delays and misfires in the loan-modification process have led to a pile-up of cases in court. "We've got a bottleneck," says Veronica Rodriquez, president of Community Assistance Provider, which counsels South Carolina homeowners. "(Now) parties have to talk to each other before they move forward with the foreclosure." By court order, all foreclosures in South Carolina pending on May 9th or filed after that day will be on hold for 30 days. During that time, homeowners and banks must prove they've been in contact and made every effort to avoid the foreclosure. Often Rodriguez says lenders are moving ahead with foreclosure while leading homeowners to believe their loans will be modified. The process is complicated and unwieldy. Rodriguez says homeowners can also be guilty of failing to communicate with the bank. They're either depressed or in denial and need nudging to tackle the modification process. "I know that sounds strange - you and I are probably thinking if my house is in danger I'm going to be moving, I'm going to be doing everything I can to stop that from happening," says Rodriguez. "But the reality is that people sometimes become paralyzed with the fear of it." Rodriguez says progress has also been slow in getting banks to accept federal funds designated to help unemployed homeowners catch up on their mortgage payments. South Carolina got nearly $300 million for that purpose, but little of it has actually been spent. RealtyTrac reports nearly 24,000 South Carolina homes were in foreclosure during March.