Foreclosure Legislation Updates
With a nationwide foreclosure epidemic in full swing, lawmakers across the country and in Washington are writing, proposing, debating and voting on legislation to help distressed homeowners. With so many bills being passed into law, revised and revisited, and others dying a slow death, legislators across the country are working hard to curb the rising rate of mortgage defaults and foreclosure filings. Total Bankruptcy will keep you up to date with foreclosure legislation updates as they happen.
Foreclosure Legislation Updates for November 12, 2008
California: New Law Attributed to Sharp Decrease in Foreclosures
Los Angeles home foreclosures fell drastically in October from the previous month as the new California foreclosure law came into effect. The new law requires lenders to contact homeowners and explore options to avoid foreclosure before the foreclosure process begins. The number of newly scheduled foreclosure auctions fell an amazing 51 percent, which is the greatest monthly decline in two years.
Maryland: News Foreclosure Laws & State is Working With Lenders to Fight Foreclosure
In the third quarter of 2008, foreclosure activity in Maryland dropped more than 15 percent from the second quarter. The decline is attributed to the new Maryland foreclosure law that was passed in April that delays the foreclosure process and allows homeowners to renegotiate their mortgage payments.
The state also recently worked with lenders to establish a "cooling off" period for people facing foreclosure, which halts all foreclosure actions and fees/penalties for 60 days. The state-lender agreement also established lender internal policies and incentives that encourage loan modification rather than foreclosure. The agreement covers about 25 percent of mortgage loans in the state.
Foreclosure Legislation Updates for October 17, 2008
Florida: Businesses Wanting to Help Homeowners Must Get Written Contracts
This new Florida law is meant to protect those homeowners who are facing mortgage foreclosure. It targets businesses that seek to help those homeowners and makes them spell out the terms of their deals. It also gives the client three days to back out of the deal. The goal is to give consumers more protection from unscrupulous predators. Those businesses in violation of the new requirements will face charges of deceptive business practices.
New York: Stiffer Foreclosure Laws to Help Homeowners
The new state laws are tough on lenders and create new defenses for homeowners. The law is stricter on criminalization of residential mortgage fraud, mandates a 90-day pre-foreclosure notice, orders mandatory settlement conferences and places extensive restrictions on mortgage brokers. Those facing foreclosure can file a complaint with the court to stop foreclosure proceedings during the court's investigation.
Foreclosure Legislation Updates for September 26, 2008
Dramatic Drop off in Foreclosures Misleading
According to Foreclosure Radar's Sean O'Toole, there has been a drastic drop off in the number of foreclosure filings in California for the month of September. In fact, there has been up to an 80 percent decline in some counties; however, the statistics are misleading.
California has implemented a new state law (previously Senate Bill 1137) that delays foreclosure filings but does not stop them. The bill requires lenders, loan servicers or agents to prove they have attempted to talk with delinquent borrowers directly about their financial problems and considered other arrangements to avoid foreclosure. To prove that these actions have been taken, there are documents that must be filed, typically in the form of an affidavit attached to the Notice of Default or Notice of Trustee's Sale. The decline in foreclosures seems to be from the back-up of paperwork.
O'Toole's blog warns that California represents a third of the foreclosure activity in the nation. The reality of the situation is that the paperwork is delaying the process and that eventually the numbers will soar back up to where they were at, if not continue to increase.
Michigan Residents Calling for Freeze on Foreclosures
On September 17, activists and victims of home foreclosures gathered to rally for Senate Bill 1306. The bill will let homeowners go to court for an automatic stay to delay a sheriff's sale for two years or extend the redemption period from six months to two years. During this delay, a reasonable repayment plan would be established based on the borrower's income and ability to pay. Many feel that the bill will give people a much-needed relief as the economy and housing crisis continues to downward spiral as the banks begin to struggle.
Michigan holds the number-one spot for plant closings, poverty and unemployment in the country. It is also one of the leading states in home foreclosures. Even those who are able to make payments on their house are affected, as property values plummet.
Senate Bill 1306 was first introduced to the banking committee in April 2008; yet, State Senator Randy Richardville, chair of the committee, refuses to move the bill out of the committee.
Foreclosure Legislation Updates for September 10, 2008
Louisiana: Mortgage Foreclosure Moratorium for Hurricane Victims
HUD recently announced a 90-day halt on foreclosures in 34 parishes in Southern and Central Louisiana. It also offered support to homeowners and low-income renters who were forced from their homes due to Hurricane Gustav. This provides relief to families facing foreclosure whose hurricane-damaged homes are insured through the FHA and who live within the 34 parishes, which were all declared a disaster area by President Bush.
HUD is also strongly recommending that loan servicers take actions such as special forbearance, loan modification, refinancing and/or waiver of late charges. A presidential disaster declaration additionally provides federal grants for temporary housing and home repairs and low-cost loans to cover loss, among other benefits.
Chicago: City Launches Program to Attract Homebuyers
The City of Chicago is launching a program to try to motivate qualified buyers to purchase about 200 homes that the city has investments in, all priced between $150,000 and $450,000. The city hopes that the combination of price reductions, tax credits, down-payment assistance and financial aid will lure in homebuyers and help stimulate the local market.
The city itself did not invest any new money in the program, but it did launch an aggressive marketing campaign to bring awareness to the existing city tax credits and price-reduction programs. Non-profit community groups, banks and private developers are chipping in to help finance the program. Much of the financial aid will be directed to buyers of about 100 homes in former public housing facilities that are now being redeveloped for mixed-income housing.
Foreclosure Legislation Updates for August 27, 2008
Foreclosures Still on the Rise
On Thursday, August 21, RealtyTrac reported that foreclosure fillings grew by more than 50 percent in July 2008 as compared to July 2007. According to data, more than 272,000 homes received foreclosure notices last month, which is 55 percent more than the 175,000 notices sent out in July 2007 and 8 percent more than in June of 2008. One in every 464 U.S. households received a foreclosure filing last month, with Nevada, California, Florida, Arizona, Ohio, Georgia and Michigan having the highest foreclosure rates.
The housing crisis has been brought on by a number of factors, including weak housing sales, decreasing home values, a slow economy, and of course, tighter mortgage lending criteria following the subprime lending fiasco; however, it is unknown how new legislation passed by the government will help with the housing crisis.
In July, President Bush approved legislation that aims to help stop foreclosures by giving homeowners the option of switching their mortgages to more affordable loans as long as the lender agrees to take a loss on the initial loan. The legislation is expected to help about 400,000 households, but some fear that lenders will only present their highest-risk loans in which borrowers will default and leave taxpayers on the hook.
Despite new legislation, around 2.8 million households will deal with foreclosure by the end of 2009, with some homeowners turning their homes over to lenders or selling their properties for less than the mortgage value.
Also released on August 21, the National Association of Realtors said that the median home price fell in more than 75 percent of cities nationwide in the second quarter; however, it seems that borrowers are taking advantage of the discounts on foreclosed homes as home sales rose in the areas with the largest numbers of foreclosures.
North Carolina Passes Three Bills to Help with Foreclosure Crisis
On Monday, August 14, North Carolina Governor Mike Easley signed three bills that will help homeowners and communities with the ever-increasing number of foreclosure filings.
The first of the three bills will establish the North Carolina Foreclosure Prevention Project, which will mandate that homeowners and the state’s bank commissioner receive a 45 day notice before the foreclosure is filed. Under this new law, the bank commissioner is allowed to extend any foreclosure filing notices by 30 days. Expected to help more than 25,000 families keep their homes, this extra time will allow homeowners and mortgage holders to figure out a loan interest rate and payment schedule.
Another bill passed last Monday will eliminate rate spread premiums or yield spread premiums, which go to mortgage brokers. People who support this bill believe that it offers borrowers a way to spread out mortgage broke fees over the life of a loan, while those opposed to the bill feel that the payments will only encourage brokers to charge higher fees without any benefit to consumers.
The last of the three bills Easley signed requires individuals and companies serving loans in the state to register and file reports to the bank commissioner.
Foreclosure Legislation Updates for August 1, 2008
Chairman of the House Financial Services Committee Calls for Foreclosure Freeze
Rep. Barney Frank, the chairman of the House Financial Services Committee, has called on lenders to halt foreclosure filings until a new foreclosure-prevention program takes effect, according to a report by the Washington Post. The program is included in a massive housing package that passed the House last week, the Senate over the weekend and was signed by President Bush on July 30. It will take effect on October 1 and will attempt to move as many as 400,000 distressed homeowners into more affordable loans that will be backed by the federal government.
California Governor Announces Foreclosure Relief Plan
California Governor Arnold Schwarzenegger stood in front of a home for sale in Stockton on July 21 and announced that $200 million in loans will be made available by the state for first-time home buyers who will purchase homes in neighborhoods that have been hit hard by foreclosures. The loans will be distributed in areas that have reported a high number of foreclosures, according to a report by the Lodi News-Sentinel. The loan program will be run by the California Housing Finance Agency, and the $200 million bond fund allocation will be provided by the California Debt Limit Allocation Committee. Homes must be within the agency's price limits and home buyers must meet income requirements to qualify for the program.
Funds Allocated for New York Foreclosure Prevention
The Westchester County Board of Legislators in New York has given Westchester Residential Opportunities, Inc., a federally-certified housing support agency, $150,000 to boost eviction prevention services for the public, according to a report by MidHudson News. The money will be used to hire new staff to do mortgage counseling, negotiate with creditors and look for other options.
Foreclosure Legislation Updates for July 25, 2008
States Deal With Foreclosure Problem
USA Today recently reported that about 20 states are stepping up to the plate to try to stop the increasing rate of mortgage foreclosures as they continue to wait for federal relief to pan out. In at least nine states, more than $450 million has been spent to assist homeowners in subprime mortgages with emergency or short-term loans and in some cases to buy foreclosed homes outright.
In Connecticut, more than $50 million has been committed to help eligible families refinance their subprime mortgages into 30-year fixed-rate loans at an affordable interest rate. The state's housing authority will make payments for the homeowner for up to five years as long as the borrower is able to make at least partial payments during that time.
In Maryland, $100 million has been committed to help homeowners who have adjustable-rate or interest-only mortgages that are due to reset to higher payments. Eligible homeowners will be able to apply for 40-year fixed-rate loans.
In Ohio, at least $100 million in taxable bond proceeds is being used to start a program that allows homeowners with adjustable-rate mortgages to refinance into fixed-rate loans before they get behind on the payments. Applicants for this program must agree to attend loan financing counseling.
In Delaware, $2 million has been set aside to provide up to $15,000 emergency loans for homeowners in foreclosure to pay past-due balances and/or to pay up to 12 future mortgage payments.
In New Jersey, $30 million has been provided to fund a program to refinance mortgages for homeowners who can't afford the rate reset on their adjustable-rate mortgages or other loan terms or who have been denied a loan modification for a 30- or 40-year fixed-rate loan. In order to be eligible, homeowners must meet income and maximum-mortgage limits.
In New York, a $100 million program has been established to allow homeowners who have an adjustable-rate or interest-only loan with an upcoming reset to refinance into a 40-year fixed-rate loan. Homeowners must meet income limits in order to qualify.
North Carolina Foreclosure Bill Passed
In North Carolina, legislators have approved a bill that gives the state commissioner of banks the authority to step in when homeowners in subprime mortgages are facing foreclosure, according to a report by the Triangle Business Journal. The bill requires mortgage companies to give homeowners at least 45 days notice before they file a foreclosure action on a subprime loan. When the homeowner is notified of an upcoming foreclosure action against them, a notice will also have to be filed with the state commissioner of banks who will then review individual loans to attempt to find a way for the homeowner to avoid foreclosure. If there is an option for the homeowner to avoid foreclosure, the commissioner will be able to push the foreclosure action filing back an additional 30 days while the state banking office works with the homeowners and mortgage servicers to work out a deal. This bill has passed the House and the Senate, and Governor Mike Easley is expected to sign it.
Maryland Foreclosure Laws May Have Lowered Foreclosure Rate
The foreclosure rate in Maryland dropped 23 percent from May to June 2008, according to new data from RealtyTrac. A report by Gazette.net speculates that the steeper decline of foreclosures in Maryland, as compared to other states and the nationwide average of 3 percent, may be due to foreclosure relief laws signed by Governor Martin O'Malley on April 3. The new foreclosure laws extended the timetable of a foreclosure from 15 days to 150 days and prohibited prepayment penalties.
Senate Passes Plan to Offer Foreclosure Rescue
The Senate has overwhelmingly passed a mortgage rescue plan that will help hundreds of thousands of homeowners avoid foreclosure and refinance into affordable, safer loans. The Associated Press reported that the plan will let distressed homeowners get affordable mortgages backed by the Federal Housing Administration. Banks that agree to take substantial losses on mortgages could avoid the expense of foreclosures and at least be able to recover some of the original debt. The program will allow the FHA to insure as much as $300 billion in new mortgages, which could help as many as 400,000 homeowners avoid foreclosure. The White House has threatened to veto the bill without major revisions.
Foreclosure Legislation Updates for July 18, 2008
Bush Administration Pushes Rescue Plan for Fannie Mae and Freddie Mac
The Bush administration lobbied lawmakers in Washington on July 16 to support a rescue plan for mortgage giants Fannie Mae and Freddie Mac, according to the Associated Press. Legislators are skeptical of the plan and are weighing options as to how to protect taxpayers while still allowing the federal government to use an enormous amount of cash to bail out the mortgage lenders. Many lawmakers feel that Fannie Mae and Freddie Mac, which hold or guarantee more than $5 trillion in mortgage loans, are too large and important to be allowed to go under. A separate broad foreclosure rescue package is expected to clear Congress by the end of July.
Schwarzenegger Signs Foreclosure Bill in California
California Governor Arnold Schwarzenegger signed a new Senate bill into law on July 8. The bill will require lenders to get in touch with homeowners and consider restructuring home mortgage loans before officially filing a foreclosure action. The new law also provides tenants with 60 days to vacate a property after mortgage foreclosure, rather than the previous 30 days that were allowed. KHTS News reported that under the new law, lenders will also be responsible for maintenance on the foreclosed homes and will not be allowed to let them fall into a state of disrepair. California lawmakers and Governor Schwarzenegger hope that by opening a dialog between lenders and distressed homeowners that many foreclosures can be avoided.
Homeowners and Advocates Rally for New York Foreclosure Bill
The Queens Daily News reported that distressed homeowners who are facing foreclosure and their advocates rallied outside the offices of state Senator Frank Padavan to urge him to take action on a stalled foreclosure bill. Representatives from ACORN and the NAACP led homeowners in the rally to put pressure on the Senator to pass a bill that he co-sponsored that would implement a one-year moratorium on all New York foreclosures. The Assembly version of the bill breezed through on May 7 giving homeowners a spark of hope, but it was quickly extinguished when the Senate version of the bill stalled. Republican legislators and Governor Patterson are not in favor of a foreclosure moratorium because they fear that banks will exclude New York residents from mortgage loans and lines of credit. However, legislative leaders and Governor Patterson later announced that an agreement has been reached to help homeowners faced with foreclosure that will also create tighter regulation of mortgage loans and increase consumer awareness.
New Hampshire Governor Vetoes Legislation to Evict Tenants after Foreclosure
New Hampshire Governor John Lynch decided to veto legislation that would allow buyers at foreclosure auctions to quickly evict tenants without a recorded, roll-call vote in either branch of the state legislature. The bill would allow the winning bidder at foreclosure auctions to immediately begin evictions proceedings to remove tenants in the property before closing on the purchase and legally becoming the owner of the property, according to the Nashua Telegraph.
North Carolina House on Board with Governor's Foreclosure Plan
North Carolina Governor Mike Easley has endorsed a measure that would give assistance to subprime mortgage holders who are facing foreclosure in order to help them get more favorable terms on their loans. Easley was supported by the banking industry and also got a unanimous nod from the North Carolina House. The measure would call for the North Carolina Commissioner of Banks to become more involved in an emergency program designed to avoid as many as $25,000 of the predicted 60,000 home foreclosure filings in North Carolina this year. The bill is now being considered by the Senate, and Easley has urged them to act quickly before the end of the legislative session, according to a report by the Associated Press.