Law requires lenders to send notice of foreclosure

The Mortgage Conciliation Act signed into law by Gov. Lincoln D. Chafee this month requires banks and lenders to make a good-faith attempt to negotiate with homeowners before foreclosing on homes.
“Nobody wants to foreclose, believe me,” said Rhode Island Mortgage Bankers Association President Deborah Imondi. “We always realize there may be situations like medical issues or loss of a job that may cause delinquency.
“Hopefully, this law will give a reprieve period that will give some time for new job creation and that’s what’s going to lead to financial and economic stability for our residents,” Imondi said.
The law requires mortgage lenders to provide the homeowner written notice that a foreclosure may not proceed without a mediation conference with a HUD-approved independent counselor. The notice must be in English, Portuguese and Spanish.
The notice of required mediation is for mortgages not more than 120 days delinquent. The mediation conference must take place within 60 days of the mailing of the notice.
“It allows a consumer facing foreclosure to sit down with a representative of the bank and a third party to mediate whether there is a fair alternative,” said Joey Lindbeck, special assistant to Rhode Island Attorney General Peter Kilmartin.
“Communities that have mediation ordinances, like Warwick and Warren, that go through Rhode Island Housing, that has been going well,” said Lindbeck. “While we are still hearing complaints from consumers about getting the runaround from providers … that has decreased.”
Under the new law, if the homeowner does not respond or cooperate with the effort at conciliation conference with the lender, the lender may proceed with the foreclosure process.
The new legislation applies to “owner-occupied, residential real property, with no more than four dwelling units, which is the primary dwelling of the owner.”
While Rhode Island’s mortgage crisis has eased somewhat, as is the situation in many areas of the U.S. in the few years since the peak of the financial crisis and complications that arose from lowered underwriting standards for mortgages, the problem is not over for many families in the Ocean State.
Residential foreclosures filed in Rhode Island fell 26.5 percent in the first quarter of 2013 compared to the first quarter of 2012, according to a June report by HousingWorksRI. “Year-over-year quarterly comparisons reveal the number of actual foreclosures in the first quarter of 2013 were the lowest since 2009,” according to the report.
“Locally, 25 municipalities reported decreases in actually foreclosure deeds filed in 1Q 2013 from 1Q 2012, while seven experienced increases and eight saw no change,” according to the report.
Smithfield topped the list of seven municipalities that had increased foreclosures in the first quarter of 2013 over the first quarter 2102, rising from six to 14, an increase of 133.3 percent.
For the same time period, Lincoln foreclosures rose 100 percent, from two to four, and Foster also increased 100 percent, from one to two.
Glocester rose 40 percent, from five to seven foreclosures; Coventry rose 33 percent, from 18 to 24; West Warwick rose 22.2 percent, from 18 to 22; and Burrillville rose 14.3 percent, from seven to eight foreclosures.
Foreclosures in Tiverton declined from 10 to zero.
“Despite falling foreclosures, many Rhode Island homeowners continue to struggle with negative equity in their homes,” according to the HousingWorksRI report.
“Rhode Island is currently first in New England and 10th in the nation for share of underwater mortgages,” according to the report.
The new Mortgage Conciliation Act is nothing new for Webster Bank, said Bob Twomey, regional president for Rhode Island and southeastern Massachusetts.
Webster Bank’s Mortgage Modification Program has been in operation since 2008 across its footprint in southern New England and Westchester County, N.Y.
Webster mortgage specialists have been sitting down with homeowners and trying to figure out what they can afford, for instance, if an owner loses a job, said Twomey.
Even though the bank may technically be able to foreclose, it’s really not in the best interest of the bank, he said.
“If the bank forecloses we have to pay taxes, security and insurance and we have to worry about vandalism,” Twomey said. “If we keep people in their homes, it’s win-win.”
Webster Bank has done $194 million worth of mortgage modifications that’s kept 1,200 families in their homes since the Mortgage Modification Program began, said Twomey. •

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