Sunday, March 9, 2014
Key provisions of the bill include a mandatory foreclosure mediation program, protections to renters in foreclosed multifamily units, better collection of data and more outreach to borrowers at risk of foreclosure.
Maine does not have the dramatic concentration of foreclosures of the more urban states, but we are facing our own foreclosure crisis nonetheless. By the end of December 2008, there were 5,455 loans in foreclosure in the state according to the Mortgage Bankers Association's National Delinquency Survey -- a 45 percent increase from 2007. The MBA data indicate that 6,900 loans are projected to go into foreclosure in Maine in 2009 -- reaching over 25,000 over the next four years if no action is taken.
A foreclosure affects more than just the family facing the loss of their home. It spreads like cancer through our neighborhoods, causing declines in property values, loss of tax base to fund our schools and city services, and a surplus of abandoned homes.
According to the Center for Responsible Lending, a national policy and research organization, this spillover will impact over 42,000 neighbors of foreclosed homes in Maine, causing a $133 million decline in property values in our state in 2009.
At Coastal Enterprises, we see the impact of foreclosures first-hand. As one of the state's network of HUD-approved housing counseling agencies, CEI is flooded with families seeking help. We have worked with 111 families facing foreclosure in the past six months alone.
Homeowners at risk come from every Maine county. They fear losing their homes because of loans that were predatory and unsustainable, job loss or the other economic factors that affect us all.
Now, most are unable to refinance or sell their homes due to the drop in home values.
One key obstacle to helping families stay in their homes is the inability to find or reach the lender who has authority to work out a possible deal.
Due to the fact that many of these loans were sold by the original lender, sometimes to multiple owners, it is exceedingly difficult for a borrower to know whom to talk to.
This problem is further complicated because the companies (known as servicers) that now manage these loans have inadequate capacity, knowledge or authority to work with borrowers in any meaningful way.
Mediation such as that proposed by LD 1418 would get a decision-maker to the table.
A court-supervised mediation program ensures that both parties can come to the table and can reach a mutually agreeable decision early in the process. It ensures that families at risk of losing their home and those with authority can discuss, in a transparent setting, options other than foreclosures.
One possible solution for borrowers who can afford it is a modification of their loan. The Obama administration recently announced a number of incentives to make modifications easier and more feasible for both borrowers and lenders.
But the benefits of this plan will only be realized if the lines of communication are clear and open. Mediation helps open these lines of communication more quickly than is currently happening.
If mediation determines that there is no solution other than foreclosure, then mediation provides a soft landing, saving both parties the months of expensive and stressful attempted negotiation that we see.
Requiring mediation prior to foreclosing on a home has shown success in other places, such as Philadelphia, and would be a vast improvement of the current process in Maine. As suggested by LD 1418, we need to give homeowners access to decision-makers who can help families stay in their homes.
Given the devastation we witness every day, Maine needs strong laws in place, both to address the foreclosures we have and prevent more from occurring in the future.
— Special to the Press HeraldHomeowners at risk come from every Maine county. They fear losing their homes because of loans that were predatory and unsustainable, job loss or the other economic factors that affect us all. Now, most are unable to refinance or sell their homes due to the drop in home values.