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| States are pushing and passing legislation designed to stiffen oversight of originators and stem foreclosures.
Massachusetts enacted new legislation designed, officials and regulators say, to reduce the foreclosures that have become emblematic of the subprime mortgage meltdown. Gov. Deval Patrick has signed the legislation, which included input from lawmakers, the state attorney general’s office and industry representatives. “These reform measures will give [Massachusetts] and its citizens some of the tools necessary to fight the surge in home foreclosures and unfair lending practices,” Patrick said in a statement. According to Patrick’s statement, the new law will improve oversight and lending of certain mortgage lenders; require licenses for originators; establish education centers to provide first time homebuyer and foreclosure counseling; grant rights to tenants living in foreclosed properties; improve record-keeping and tracking of foreclosed properties; prohibit adjustable rate loans for first time buyers unless that are counseled on the loan and fully qualify for it. Also, mortgage holders must file a 90-day notice of “intent to foreclosure” with the homeowner and state regulators. In Kentucky State Sen. Gerald Neal, a Democrat from Louisville, the state’s largest city, has filed what he calls a “homeowner protection” bill. The bill would establish the Kentucky Homeownership Protection Center. Neal said in a statement that the center will provide a “centralized location for information on public services to assist a homeowner who is default” of a loan. Services would include counseling through a toll-free telephone number, staff members and other agencies and applications for public assistance and other benefits. Under the bill, lenders would be required to register with the center any homeowner that is 60 days or more late on their mortgage payment. Lenders would also be required to provide late payment notices to the center and “engage in reasonable loss mitigation activities as an alternative to foreclosure,” Neal said. “Too many people are losing their homes … throughout Kentucky to ignore this problem,” he said. The Kentucky General Assembly will take up the bill in early 2008. New York legislator Rory Lancman has filed the Fairness in Lending Act, a bill that “creates additional duties of mortgage brokers,” according to Lotstein Buckman. “Among other things, the bill seeks to impose a fiduciary duty upon mortgage brokers and would require mortgage brokers to verify the reasonable ability of the borrower to repay the loan,” the firm said. Several states have passed or are considering similar regulations. The state of Washington has enacted a law that helps homeowners avoid foreclosure by giving them temporary relief from property taxes. Gov. Christine Gregoire has signed a bill that provides a property tax deferral. The tax break is designed to help homeowners stave off foreclosure because of high property taxes. Under the bill homeowners below median income — about $57,000 a year — could postpone up to 25 percent of their property tax. The amount owed could not exceed 80 percent of equity. The District of Columbia has enacted the Home Equity Protection Act of 2007, which was written to crack down on mortgage foreclosure rescue services, according to city documents. The act is awaiting the signature of Washington Mayor Adrian Fenty. It provides regulations and advertising requirements for companies offering foreclosure rescue services. Under the act it would be illegal to profit from a foreclosure rescue service, according to a memo from the district’s chief financial officer Natwar Gandhi. |
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Patrick Crowley is a feature journalist and blogger for MortgageDaily.com. He is also a reporter, blogger and columnist for The Cincinnati Enquirer. |
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