Advocates Urge R.I. to Extend Foreclosure Protection for Homeowners
Updated 6/27/18: DS News published an article titled Extending Foreclosure Protections for Homeowners.
Updated 5/23/18: The Providence Journal published an article titled R.I. Senate OKs extending foreclosure protection for 5 years.
Link to article
May 21, 2018
Source: Providence Journal
State of Rhode Island General Assembly (S 2270 Substitute A full text)
PROVIDENCE — Attorney General Peter F. Kilmartin joined housing advocates — as well as the mayors of Providence, Pawtucket and Warwick — on Monday to urge the General Assembly to extend the state’s Foreclosure Mediation Act, set to expire on July 1.
The law requires lenders to give homeowners facing foreclosure the option of meeting with their lender and an independent mediator from Rhode Island Housing to attempt to work out a solution and avoid foreclosure.
“For me, this is just basic common sense,” said Pawtucket Mayor Don Grebien. “This to me is a no-brainer.”
Barbara Fields, executive director of Rhode Island Housing, said that as of March 31, the law, passed in 2013, has helped 679 Rhode Island families stay in their homes.
Sen. Harold Metts, D-Providence, and Rep. Mary Messier, D-Pawtucket, have introduced legislation to lift the law’s sunset provision. Messier joined Kilmartin, Fields, Providence Mayor Jorge Elorza, Warwick Mayor Joe Solomon and Grebien on Monday to urge passage.
Amended legislation is scheduled for a vote on the Senate floor on Wednesday. It would extend the law for another five years, until July 1, 2023, and would limit the filing fee charged to banks to $100, down from the present $150. The House version would make the mediation requirement permanent, but it has been held for further study by the Judiciary Committee.
Kilmartin said the theory behind allowing the law to expire is that the foreclosure crisis has passed, “but that is just not the reality.” Although the economy has improved since the recession caused by the banking crisis of 2008, not everyone has benefited equally, and many Rhode Island homeowners continue to struggle financially, he said.
Kilmartin added that in Washington, the Dodd-Frank Wall Street reform legislation passed in the wake of the foreclosure crisis “is under assault in Congress.”
“The banking industry acknowledges that the foreclosure situation in Rhode Island, although it has improved dramatically since 2013, remains at historically high levels,” William Farrell, spokesman for the Rhode Island Bankers Association, said in an email.
But Farrell said the high cost of the mediation requirement is a concern. The $150 fee required for every notice sent has added up to almost $4 million for banks, he said, though most notices go unanswered. He said banks have had to send out close to 25,000 notices since the law was enacted. For cases that actually go into mediation, bankers must pay an additional $350, but he said the amount of actual mediations is much smaller. Fields said close to 1,000 cases have been mediated. Farrell said the total cost of the program so far is close to $7 million, and he said Rhode Island Housing has “profited” nearly $2 million from the law.
Fields said the law is needed to “level the playing field” for consumers dealing with “big, out-of-state banks.” She said similar protections exist for consumers in neighboring New England states, and Rhode Islanders deserve the same consideration.
Elorza noted that Providence is still dealing with the effects of the foreclosure crisis, thanks to banks that were “too big to care.” He said they foreclosed and left homes unattended to fall into blight. But he said his EveryHome program has led to the reclamation of 300 formerly abandoned properties, which now have “someone living inside them” and are free from housing code violations.