Safeguard Properties

The Fault Line?s Implications on California Housing

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Industry Update
April 18, 2018

Source: MReport

We’ve all seen the big, action-packed blockbuster movies where a wicked natural disaster—fire, flood, furious storm, you name it—sends entire regions reeling. When it comes to one particular place in California, those fictitious scenes might not be so far from the truth, according to a new CoreLogic report. And the impact on the local housing system, residents, and economy, in general, would be earth-shattering, it emphasizes.

The report titled “Financial Implications of the HayWired Scenario” opines on the potential impact of an earthquake along the Hayward fault, located beneath the heavily populated and economically important communities of the San Francisco East Bay. And the potential is definitely there, as the area “represents a clear and present danger of hosting a catastrophic earthquake,” the report notes. The HayWired scenario chronicles a theoretical 7.0 magnitude earthquake along the Hayward fault followed by 16 aftershocks ranging from 5.0 to 6.4 magnitude.

If this seismic event were to occur, upwards of 1.1 million homes would likely suffer serious damage, with a lesser amount expected to be “functionally impaired” as a result of the main quake and resultant aftershocks, the report found. Total damage estimates to private property for the all-told scenario: $170 billion, with just a small amount of damages insured, the report said. Of that fraction, the report estimated insurance payouts to property owners at approximately $30 billion, mostly due to the meager purchase rate of earthquake insurance. “The potential for systemic impacts triggered by the lack of insurance is noted as a particular concern as a significant portion of the property damaged by the earthquake serves as collateral for property mortgages,” the report said.

“This assessment of the potential interplay between the physical aftermath of such an earthquake with the insurance world hopefully will help people be better prepared if such an event were to occur,” said Tom Larsen, Principal, Industry Solutions for CoreLogic.

“With a better understanding and a practical planning scenario for the effects of an earthquake, we can begin to rethink how we plan for and respond to these disasters and thus improve our ability to recover,” said Larsen.

Senate Addresses Robocalls: What Mortgage Servicers Need to Know

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Industry Update
April 18, 2018

Source: DS News

Although robocalls can be an important element of how the financial services industry communicates with those they are doing business with, robocalls are often seen in a bad light due to some fraudulent or abusive calls that are made without a participant’s consent. In order for the industry to use them properly, clarity is needed on issues such as what qualifies as a robocall, who is legally permitted to be contacted, and how a consumer can grant consent for the communication. A Senate hearing Wednesday tackled this topic head-on.

“Not all of them are inherently negative,” said Sen. John Thune, Chairman of the Committee of Commerce, Science, and Transportation in his opening remarks at the Senate hearing on Wednesday. The hearing attempted to lay out steps the government and the industry can take to protect against scammers who take advantage of this technology.

“Many important services are carried out via robocall where companies and call recipients have pre-established relationships and where the consumer has agreed to participate in these types of calls,” said Thune. For instance, robocalls may be used by the financial services industry to remind customers about pending payments or to communicate with homeowners in case of natural calamities.

Recently, an Appeals court also weighed in to clarify the issues of robocalls and consent. The U.S. Court of Appeals for the District of Columbia Circuit issued a ruling in the case of ACA International v. FCC, clarifying several issues with regard to consumer and industry rights pertaining to robocalls and texts sent to consumers.

ACA International had challenged the FCC’s interpretations of the TCPA, as laid out in a July 2015 Omnibus Declaratory Ruling and Order on three issues—the definition of an ‘automatic telephone dialing system,’ the identity of the ‘called party’ in the reassigned number context, and the means by which consent can be revoked.”

Scott Delacourt, Partner, Wiley Rein LLP and a representative of the U.S. Chamber of Commerce who testified at the Senate hearing on Wednesday said: “Unfortunately, the Commission’s implementation of the Telephone Consumer Protection Act (TCPA) over many years has fostered a whirlwind of litigation,” said Delacourt. “Interpretations by courts and the FCC have strayed far from the statute’s text, Congressional intent, and common sense, turning the TCPA into a breeding ground for frivolous lawsuits brought by serial plaintiffs and their lawyers, who have made lucrative businesses out of targeting U.S. companies.”

According to Delacourt, the number of TCPA case filings exploded to 4,860 in 2016, and TCPA litigation grew 31.8 percent between 2015 and 2016.

However, fraudulent robocalls remain a persistent challenge for the Federal Trade Commission (FTC), Federal Communications Commission (FCC), and for the industry and lawmakers.

In 2017, the Federal Trade Commission (FTC) received 7.1 million complaints from consumers against robocalls. Of these, 771,000 complaints were about fraudulent calls that allegedly helped consumers reduce debt.

“Illegal robocalls remain a significant consumer protection problem because they repeatedly disturb consumers’ privacy and frequently use fraud and deception to pitch goods and

services, leading to significant economic harm,” said Lois Greisman, Associate Director, Marketing Practices Division, Bureau of Consumer Protection at the FTC. “Illegal robocalls are also frequently used by criminal impostors posing as trusted officials or companies.”

Greisman, who was one of the witnesses testifying at the hearing, said that technological advances had permitted lawbreakers to make more robocalls for less money and with a greater ability to hide their identity.

The Senate also heard a testimony from Rosemary Harold, Chief, Enforcement Bureau, at FCC who said that many fraudulent robocalls were designed to trick people out of significant amounts of money. “These schemes often are most effective in harming vulnerable populations, such as senior citizens,” said Harold. “Unwanted robocalls are the Commission’s number one source of consumer complaints. The recent Omnibus legislation will provide significant assistance in our enforcement efforts.”

Maryland Foreclosure Procedure Bill Approved by Governor

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Legislation Update
April 24, 2018

Source: General Assembly of Maryland (HB 78 full text/information)

Synopsis: Requiring the Department of Labor, Licensing, and Regulation to establish procedures that require a foreclosure purchaser to submit to the Foreclosed Property Registry any change to certain information within 21 days after the change is known to the purchaser; requiring the Department to notify, by electronic means, on receipt of an initial registration or any change to certain information, authorized users from the county and the municipal corporation in which the property is located; and providing for a delayed effective date.

Investing in the Future of Default Servicing

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Industry Update
April 11, 2018

Source: DS News

Editor’s Note: This story was originally featured in the April issue of DS News, out now.

With a quarter of 2018 under our belt, it’s clear that our prediction—that the financial service industry will continue to place a high emphasis on strategic technology investments—was right. Technology modernization and digital transformation are among the top reasons banks, credit unions, lenders, and servicers are investing and updating systems. These organizations are looking for solutions to overcome some of the same challenges the industry has faced for years, such as the need to keep pace with increased regulations, provide efficient service at a lower operational cost, and easily access the crucial information they need to make smart decisions.

The default servicing industry in particular faces extraordinary challenges to meet the needs of homeowners, investors and industry regulators to increase transparency and consistency within processes and drive accountability for decisions. We’re seeing emerging technology help servicers streamline, automate, and integrate operations to eliminate inefficient processes and keep up with changing regulations.

Increased Self-Service Avenues

The need for self-service channels extends through all parts of the loan process, from origination to funding, closing, and servicing. Borrowers require more self-service avenues to not only originate a loan request but also to meet the transparency demands through the process to get timely and accurate updates. This need exists for servicing as well.

Modern technology alone can provide the level of transparency required. Websites, portals, cloud-based sharing platforms, and mobile integrations are all examples of various methods by which lenders and servicers create a more fluid and transparent loan experience for their customers. The lending world is adopting these types of technologies at a rapid pace to stay ahead of the competition.

Better Integrations for Data Collection

The mortgage industry relies heavily on data. Often, information is gathered, stored, and retrieved from multiple places, creating silos that are not easily accessible from the primary line of business application one is working in when they need it. This process causes extra steps and wasted time bouncing between apps to find the right information. Many servicers are leveraging enterprise information platforms to remove information silos and connect data, regardless of where that information originates.

These information platforms work as a hub to connect disparate IT systems and data, so information is updated simultaneously. This helps employees evaluate loan documents and packages faster, knowing the information is accurate and make the best decision for the organization. With increased confidence that data is current, regardless of which application an employee is accessing that data, they gain time and confidence back.

Automated Data Validation

In many industries, it’s vital to ensure data is correct from the moment it is ingested to avoid costly mistakes later. New regulations are driving demand for quality control and transparency throughout the process, extending servicer accountability for actions of third-party providers. Automated data extraction technology takes the burden of manually gathering, reviewing, and approving information off staff, removing this tedious and error-prone task from their job.

Modern enterprise information platforms can extract the right information from a form using data extraction and validate that information by creating configurable rules per data field. The capture capabilities within these applications can perform mathematical functions or develop procedures by accordance with specific business processes, to further validate the information pulled from a document and compare it with values that exist in other systems. Once data is extracted, exceptions can be flagged and presented to staff to verify, along with the corresponding documentation, allowing for a quick and easy exception review process.

Sophisticated Business Process Management/Workflow

As the financial services industry continues to embrace technology to promote fully digital processes, functionality such as business process management (BPM)/workfl ow becomes essential to automate time-consuming and manual processes. Transparency and consistency are among the top reasons servicers are seeking workflow–to know every process is following the same steps, ensure compliance, and see a holistic view of the process to determine where bottlenecks hinder efficiency. It can become overwhelming to manage the sheer amount of documentation required within default servicing procedures–if the information is lost it becomes risky as well.

The best workflow solutions offer servicers capabilities to keep processes moving as quickly as possible, resulting in lower processing costs and increased consumer satisfaction. Not only do these solutions route the right information to the right person, at the right time, they also include timers and reminders to keep procedures moving and meet deadlines to speed loan modifications, foreclosure, and REO. Flagging of incomplete data prevents issues arising from missing information.

Electronic Delivery

Servicers have historically relied on paper files sent from their lenders, brokers, and correspondents. As the lending industry moves toward digitization, this reliance on paper can be detrimental to a servicer’s ability to scale with the necessary demand. Servicers recognize that the ultimate cost on a per-loan basis directly correlates to their ability to accurately collect documents and data on the loans they receive and respond quickly to the increased demand.

Technology has provided advantages for lenders and servicers to standardize the coordination, packaging, and delivery of loan files for processing. From meeting the individual requirements of each lending partner to ensuring compliance with federal mandates for uniform data delivery, technology can fill those gaps that the paper-based world left behind. Technologies that allow lenders to package loans in specific stacking orders, deliver files through enterprise file sync, and share platforms and give servicers the capabilities to capture, classify, and extract relevant data can have the ability to fundamentally transform how a servicer ultimately thrives in today’s competitive lending environment.

Some of the biggest struggles the industry continues to face include eliminating paper, garnering the right information, and promoting a (mostly) digital business. Using core functionality within an enterprise information platform, which works as an information hub to gather all information, servicers can connect IT systems, people, and processes to increase confidence in decisions and fully automate procedures. Decreasing reliance on paper ensures all information is included and bolsters compliance efforts to meet industry regulations. It provides increased transparency into processes, so managers know exactly where processes lie at any particular time. Tracking every action on a document makes audits easier.

Increased self-service, better technology integrations, automated data validation, BPM/workflow tools, and electronic delivery are some of the biggest technology trends we’ll continue to see lenders and servicers implement to support their digital transformation efforts.

How These Hurricane-Ravaged States Have Avoided a Housing Disaster — So Far

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Industry Update
April 22, 2018

Source: CNN

After Hurricane Harvey soaked Houston with 51 inches of rain last August, Amir Befroui, a foreclosure defense specialist at Lone Star Legal Aid, started planning for a very busy spring.

That’s when the 90- and 180-day break on payments that mortgage companies typically give homeowners who have been hit by unexpected events like natural disasters would start to run out.

But so far, few hurricane-related foreclosure cases have been coming across his desk.

“We are starting to see a trickle,” Befroui says. “I suspect it’s going to be a gradual increase. I don’t think it’s going to be a tidal wave like the one that happened after Ike.”

According to real estate analytics firm Attom Data Solutions, foreclosure starts in hurricane-affected areas of Texas and Florida rose in the first quarter of 2018, but still remained below pre-hurricane levels.

In Houston, for example, foreclosure starts had been slightly elevated due to the oil price crash of 2015 and 2016. Not counting a dip at the end of 2017, the first quarter was as low as it’s been in more than 12 years, with 1,184 foreclosure starts. That’s a big difference from Hurricane Ike in late 2008, where the storm exacerbated a mounting economic crisis that spurred 7,280 foreclosure starts in just one quarter.

Even more encouraging, the number of people seriously delinquent on their loans in hurricane-affected areas of Texas and Florida continued to sink after spiking over the winter. Thousands of people were able to bring their mortgages current again after taking advantage of post-storm forbearances from their lenders.

Given how damaging foreclosures can be for property values, credit scores and community stability, it appears the Gulf Coast has managed to dodge a potential hurricane housing disaster. At least, so far.

Part of that is due to coordinated efforts by industry groups and consumer advocates who helped create better options for homeowners to modify their loans after the break on mortgage payments ends. But more importantly, reforms to mortgage policies following the financial crisis had already fostered a healthier housing market to begin with.

Homeowners went into last year’s disasters in a better place financially than they were during Hurricanes Ike, which hit in 2008, Sandy in 2012, and even Katrina in 2005. The irresponsible lending practices of the late 1990s and 2000s had largely been ended by the Dodd-Frank Act and the Consumer Financial Protection Bureau, which raised standards for mortgage underwriting and implemented protections for borrowers facing foreclosure.

“People who’ve gotten mortgages post-CFPB, they don’t have loans for the most part that economically they could never have afforded,” says Ira Rheingold, executive director of the National Association of Consumer Advocates.

Across the United States, the number of properties in active foreclosure fell in March to the lowest level since late 2006, according to the real estate data firm Black Knight.

But in the case of natural disasters, programs aimed at helping distressed homeowners aren’t always helpful enough. Mortgage modification programs administered by Fannie Mae, Freddie Mac, Ginnie Mae, the Veterans Administration, and the Federal Housing Administration — which now back about 70% of the U.S. housing market — require lots of documentation that’s hard to pull together if your home is literally underwater.

Homeowners were snarled in endless paperwork after Hurricane Sandy hit in 2012, with each government housing agency requiring different policies and homeowners owing balloon payments that came due immediately once the forbearance period ended.

So as the 2017 hurricane season got started in earnest, D.C.’s housing finance wonks came to government agencies with one fundamental ask: Design a uniform option that can give homeowners a break on their mortgages without getting them in trouble when the bills come due.

“We were unsuccessful during Sandy,” says Meg Burns, a former Department of Housing and Urban Development official who now heads housing policy at the Financial Services Roundtable, which represents lenders and servicers. “That’s what informed our thinking to get all of the government entities around the table to make some consistent policy.”

Along with automatic forbearances for homeowners in hurricane-affected areas, Fannie, Freddie and the FHA came up with an option that allows borrowers to make the payments they skipped during the months after the disaster at the very end of the loan — without going through a modification that could force them to take on a higher interest rate.

“It’s a different world now,” says Sara Singhas, associate regulatory counsel at the Mortgage Bankers Association, referring to the recent departure from rock-bottom interest rates. “Especially for people who are performing on their loans, we wanted to make sure we don’t put them into a worse financial position than they were prior to the disaster.”

These provisions, however, are only temporary and will sunset if they aren’t renewed. “I would feel a lot better if they codified what we did,” says Peter Muriungi, head of mortgage servicing for Chase Bank, which had 450,000 customers affected by the 2017 storms.

On the ground, housing counselors say that lenders have been more willing to work with people who can prove they have been a victim of a hurricane. That kind of patience is not typically afforded to people facing foreclosure for economic reasons, such as spiking property taxes, which have become more of a problem in the Houston area in recent years.

“The large national servicers, once they get it into their head that this is a Harvey case, then it gets moved over to the disaster recovery center rather than the traditional foreclosure side,” says Sherrie Young, executive director of the Credit Coalition in Houston.

But not everybody takes action in time to receive that kind of assistance, and not everybody qualifies when they do. For those who lost jobs as a consequence of the hurricanes or were already behind on their payments before disaster struck, options start to narrow.

That’s why thousands of people are still facing the prospect of losing their homes, and many more could run into that situation as banks lose patience in the coming months. Aid groups worry about the people who haven’t yet asked for help.

“I think the biggest problem lies with the folks who don’t reach out,” says Glenda Kizzee, a housing counselor at the Houston Area Urban League. “They’re going to utilize whatever resources they have to rebuild the home, and sometimes miss the payment on the home, which is just going to make it worse. By that time, our resources are limited in what we can do.”

The biggest headaches, counselors say, arise with smaller servicers that have fewer resources to work with homeowners in trouble.

Take Maurine Howard, whose stately home near Addicks and Barker reservoirs in Houston was inundated when the Army Corps of Engineers released the floodgates in order to avoid a breach. She paid off the three months of mortgage payments after her forbearance ended, but the mortgage company still bumped up her monthly payment from about $1,350 to $1,700.

Months of phone calls, she says, still haven’t managed to fix the problem, while she racks up credit card debt to make fixes on the house.

“Through the process of Harvey, dealing with the mortgage company has been a nightmare,” Howard says, amid stacks of paper laid out on a bed in one of the few undamaged rooms of the house. “It’s never ending. You take two steps forward and five steps back.”

Future is Uncertain for State’s Groundbreaking Foreclosure Mediation Program

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Legislation Update
April 26, 2018

Source: Hartford Courant

Additional Resource:

Connecticut General Assembly (HB 5495 full text/information)

Connecticut’s foreclosure mediation program — launched during the height of the national mortgage crisis a decade ago — could become permanent, but a bill winding its way through the legislature faces an uphill battle.

The program, which brings together borrowers and lenders, was started in 2008 and initially was intended to be temporary but has been extended several times. The program is set to expire June 30, 2019.

The bill, which narrowly cleared the General Assembly’s banking committee in a 10-9 vote and is now pending in the wider legislature, would remove a “sunset” provision for the program.

While the mortgage crisis has eased significantly in Connecticut, program supporters argue that thousands of borrowers still face the potential loss of their homes.

In 2017, 3,700 borrowers qualified for mediation — an intermediate step before the foreclosure enters the courtroom — down from 9,799 in 2009, the height of the foreclosure crisis in Connecticut, according to the state’s judicial branch.

“Although the foreclosure crisis has receded from the headlines, it is still a problem out there,” Rep. Matthew Lesser, D-Middletown and co-chair of the banks committee, said. “The idea of the program is very simple: borrowers sit down with lenders and try to work things out. In a huge number of cases it works out, and that is enough.”

Opponents of the bill say removing the sunset provision a year early is premature.
Rep. William Simanski, R-Granby and a member of the banks committee, voted against the bill, saying an evaluation next year would provide a more accurate snapshot.

“I see no need to do away with the sunset now,” Simanski said.

Lesser noted that mediation relieves the burden on the court system and isn’t paid for by taxpayers. The cost is picked up by the banking industry, Lesser said.

The cost of the program initially was $2 million, but it rose each fiscal year to $6.3 million in 2016-2017, according to a state auditor report earlier this year.

But in the current fiscal year, lawmakers cut the budget for the program in half, to about $3.6 million, and its staff of mediators, supervisors and support personal was reduced to 20 from 50. The budget cut reflected the decline in foreclosure activity. The funds that were saved were allocated to the crumbling foundation problem in eastern Connecticut.

Housing advocates acknowledged the decline in foreclosures but noted the significant role the mediation program still plays in keeping borrowers in their homes.

According to the judicial branch, 27,958 cases were completed between the start of the mediation program on July 1, 2008 and Dec. 31, 2017. Of those, 19,656 cases, or 70 percent, resulted in borrowers staying in their homes; 4,444, or 16 percent, reached agreements for a short sale or other measure for leaving the home; and 3,858, or 14 percent, weren’t settled.

The program served as a model for other states after it was launched.

Jeff Gentes, a staff attorney who manages foreclosure prevention at the Connecticut Fair Housing Center in Hartford, noted there will be always be “ebbs and flows” in foreclosure activity.

“If those numbers were 250, I’d acknowledge there would have to be some floor,” Gentes said. “As long as the program is serving thousands of people, it’s more than worth its while.”

Duffy & Perlmutter Introduce CFPB Transparency Legislation

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Legislation Update
April 17, 2018

Source: Office of U.S. Representative Sean Duffy

Additional Resource:

U.S. Congress (H.R. 5534 bill info/full text)

GUIDE Compliance Act introduced by Wisconsin Republican & Colorado Democrat

Washington DC – Wisconsin Congressman Sean Duffy, Chairman of the Financial Services Subcommittee on Housing & Insurance, and Colorado Congressman Ed Perlmutter today introduced the Give Useful Information to Define Effective Compliance (GUIDE) Compliance Act. The GUIDE Compliance Act seeks to regularize the Consumer Finance Protection Bureau’s process of providing rules and guidance to better protect consumers.

“The American people deserve a government that The CFPB has historically ignored requests for guidance and clarification from American businesses, consumers, and Congress – especially in relation to the Know Before You Owe rule,” said Congressman Duffy. “That’s why I’m proud to sponsor bipartisan legislation to bring predictability and transparency to the CFPB’s rule-making process. The CFPB should focus on its mission to actually protect consumers rather than play ‘gotcha’ with ambiguous and surprising guidance for mortgage lenders.”

Background:

Specifically, the GUIDE Act:

  1. Mandates that the Director issue “guidance” that is necessary or appropriate to carry out the purpose of the laws it is responsible for including facilitating compliance;
  2. Defines “guidance” to include a range of written issuances from interpretative and legislative rules, to bulletins and frequently asked questions;
  3. Requires the Bureau to publish in the Federal Register within one year of enactment the definitions, criteria, timelines and process for issuing each type of guidance the Bureau shall provide, with a final rule required within 18 months  of enactment;
  4. Prohibits liability for reliance in good faith on guidance from the Bureau or any predecessor agency that was in effect at the time of such act or omission;
  5. Requires the Bureau to establish a process and timeframes for requests for guidance, including time limits to provide answers in response to requests for guidance;
  6. Requires the Bureau to create a process for amending or revoking guidance, including a process for public notice and comment;

Requires the Bureau to develop guidelines for determining the size of any civil money penalties and publish these guidelines in the Federal Register within 18 months of enactment.

Cortez Masto Introduces FHA Foreclosure Prevention Act of 2018

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Legislation Update
April 19, 2018

Source: Office of U.S. Senator Catherine Cortez Masto

Additional Resources:

U.S. Congress (S.2698 bill info/full text)

U.S. Congress (H.R. 5555 bill info/full text)

HousingWire (Waters introduces legislation to prevent FHA foreclosures)

Washington, D.C. – U.S. Senator Catherine Cortez Masto (D-Nev.) introduced the FHA Foreclosure Prevention Act of 2018, legislation that will ensure banks, credit unions and mortgage lenders follow the law before taking a family’s home. When families fall behind on their mortgage payments, lenders who benefit from taxpayer-backed insurance through the Federal Housing Administration’s (FHA) must communicate with the borrower, connect the borrower to homeownership counseling, offer pre-foreclosure sales and meet other loss mitigation requirements. These laws protect borrowers from unnecessary foreclosures and tax payers from costly and unnecessary insurance payouts.

“As Nevada’s attorney general during the foreclosure crisis, I have seen far too many lives turned upside down due to rampant foreclosures, as well as the devastating effects that come with losing one’s home,” said Cortez Masto. “To this day, borrowers are unnecessarily being put at risk of losing their homes because of servicers’ failures to comply with the FHA’s loss mitigation requirements. This bill will implement common-sense measures to give borrowers a fair chance at avoiding foreclosure.”

U.S. Representative Maxine Waters (D-Calif.), Ranking Member of the House Committee on Financial Services, introduced a companion bill in the House of Representatives. U.S. Senator Elizabeth Warren (D-Mass.) cosponsored the legislation in the Senate.

“A decade after the devastating foreclosure crisis, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure,” said Ranking Member Waters. “This is why my bill, the FHA Foreclosure Prevention Act, would ensure that FHA servicers help families experiencing financial hardship avoid foreclosure so that they can remain in their homes.”

The FHA is a critical part of our housing market today, and helps promote access to homeownership for underserved communities – including first-time homebuyers and minority borrowers who are not otherwise served by the conventional mortgage market – through the provision of government-backed mortgage insurance. In 2017, the U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General (OIG) issued a report that outlined significant problems with HUD’s oversight of servicers’ compliance with FHA’s loss mitigation requirements. Deficiencies in servicer compliance with the FHA’s loss mitigation requirements unnecessarily puts borrowers at risk of foreclosure. In addition, the OIG found that inadequate compliance posed an increased risk of $120 million to the insurance fund, some of which could have been avoided if servicers had followed the law and worked with borrowers as required. This legislation seeks to implement common-sense reforms to help strengthen compliance with the FHA’s loss mitigation requirements and help ensure that every delinquent FHA borrower get the opportunity to avoid foreclosure.

The FHA Foreclosure Prevention Act of 2018 will:

  • Prohibit the Secretary of HUD from paying FHA insurance benefits to any lender unless it has provided documentation on its compliance with loss mitigation requirements.
  • Require the Secretary of HUD to conduct oversight of servicers, which must include appropriate sampling and review of such compliance and direct information collection from borrowers whose files were sampled.
  • Establish a robust complaint and appeals process for borrowers who believe they have been subject to unfair treatment related to noncompliance with FHA’s servicing requirement, including its loss mitigation requirements. The Secretary of HUD will be required to report annually to Congress regarding the types and volume of complaints received through this process.
  • Require a servicer to provide borrowers with notification of the results of the servicer’s loss mitigation review before initiating foreclosure proceedings. The notice must include several components to help the borrower understand their rights, and their ability to file a complaint.

Advocates Urge R.I. to Extend Foreclosure Protection for Homeowners

Posted on by Safeguard

Updated 6/27/18: DS News published an article titled Extending Foreclosure Protections for Homeowners.

Link to article

Updated 5/23/18: The Providence Journal published an article titled R.I. Senate OKs extending foreclosure protection for 5 years.

Link to article

Legislation Update
May 21, 2018 

Source: Providence Journal 

Additional Resource:

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.

Absecon Considers Fixing Blighted Properties Making Owners Pay

Posted on by Safeguard

Legislation Update
April 9, 2018

Source: Shore News Today (full article)

Additional Resources:

eCode 360 (Collingswood, OH)

Municipal Code

Property Maintenance Code

Upkeep of Vacant and Abandoned Residential Properties Code

Abandoned Property Code

ABSECON — When it comes to getting lienholders to properly maintain their abandoned properties, Mayor John Armstrong believes the solution might be to just do it for them.

Addressing City Council on April 5, Armstrong said he’s in favor of creating an ordinance that would allow the city, through the Atlantic County Improvement Authority, to bring abandoned properties up to code and then place a lien on them. Property owners would be forced to either pay off their lien in a timely fashion or face losing their properties once that lien is sold.

It’s a proactive way to get mortgage owners of homes abandoned largely due to foreclosure, many of them banks, to start addressing the issue of blight caused by their derelict properties, he said.

“These banks, while they’re holding onto these properties, don’t want to spend money,” Armstrong said. “They wait and they wait and things start to deteriorate. You’d think it’d be in their best interest to maintain these properties, but all they do is slap on a Band-Aid.”

The abandoned home ordinance, as proposed, would go beyond simply cutting grass or boarding up broken windows to meet code standards, but would allow for significant work to help properties that have fallen into disrepair.

The effort should not cost the municipality either, Armstrong said. Through a joint municipal agreement with the improvement authority, the cost of construction would be paid through the authority, which not only has funding for such programs but already collects registration fees for homes that are left empty.

Though the ordinance has not been formally proposed, Armstrong said he would like to see one adopted within the next two months.

Armstrong said he’s seen the fruits of such a program in towns such as Collingswood, Camden County, which suffered with its own foreclosure problem and a declining downtown during the economic downturn. Armstrong said Collingswood Mayor Jim Maley told him a similar program helped resolve the issue of blight in his town and encouraged new homeownership.

Armstrong didn’t identify any properties specifically, but did say there are several that meet the criteria for such an ordinance. He hopes the ordinance sends a message to property owners to start making repairs.

“When you pick a property, there’s a whiplash response,” Armstrong said. “Mortgage holders and banks realize it’s for real.”