Colorado Says No to Foreclosure-Prevention Bill
The rejection of the bill "sends a pretty clear message to Colorado's families: We know you're struggling, and, frankly, we don't care," said the bill's main sponsor, Representative Angela Williams (D-Denver).
The now-dead bill, which previously had received bipartisan support in two other committees, sought to charge lenders a $250 surcharge for each foreclosure filed at the county courthouse. The money was to go into a foreclosure-prevention counseling fund to pay for initiatives at local housing counseling agencies approved by the Department of Housing and Urban Development.
Other states propose similar bills; different fees
The Colorado bill is not unlike others proposed in other states, except it was criticized for being a paltry fee. In California Bob Blumenfield (D-San Fernando Valley) introduced a bill in February that would require mortgage servicers to pay $20,000 to local communities for each foreclosure proceeding it files. The California bill's aim is to mitigate the effects of lost property tax dollars from foreclosures by funding public education, local police and fire departments and redevelopment programs. If approved, the proposal would rake in about $10 billion for the state in two years.
"Bankers need an incentive to keep families in their homes," Blumenfield said in a statement to the Union-Tribune last week. "They helped create the foreclosure crisis by making bad loans and must bear some burden in solving this problem."
A similar 2008 New Jersey bill asked lenders to pay $2,000 to the state to help pay for housing counselors assisting borrowers with workout arrangements. What some would consider to be even wimpier than Colorado, North Carolina last year introduced a bill with a charge to servicers of $75. The low fee was meant to fund the state's Home Foreclosure Prevent Trust Fund, which was to, in part, provide $3.4 million in grants to reimburse nonprofit housing counseling agencies.
Mortgage servicers reach nationwide agreement
In related news affecting homeowners across the nation, the top mortgage servicers reportedly have agreed on changes to their foreclosure procedures, reported The New York Times. By the end of this week they will supposedly sign a deal agreeing to the following:
•They will be required to have more layers of oversight and proper training of their foreclosure staff.
•The oversight will extend to third party groups, including the law firms that do much of the actual work of eviction.
•They will provide a single point of contact with the servicer to each homeowner in default
•The servicers will no longer foreclose while borrowers are pursuing a loan modification that might allow them to stay in their homes.
•Servicers will hire an independent consultant to review foreclosures done over the last two years
•If owners were improperly foreclosed on or paid excessive fees, they will be compensated.
JPMorgan Chase Chief Executive Jamie Dimon said, "Some of the mistakes [servicers made] were egregious, and they're embarrassing," reported Bloomberg News. "But we made a mistake, and we're going to pay for that mistake."
Sheree R. Curry, who has owned three homes but never went into foreclosure, is a three-time award-winning journalist who has covered real estate for six years. During her 20-year career, her articles have appeared regularly in the Wall Street Journal, TV Week, and Fortune. She's been writing for AOL Real Estate since 2009 from a Minneapolis-area rental. She seeks a book publisher -- or at least a lender who'll give a reasonable mortgage rate to a self-employed mom.
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