Ohio Officials Swing Into Action On Foreclosure Crisis

Posted in Foreclosure Crisis, November 13th, 2007 |

As part of taking corrective action on the foreclosure problem plaguing the State and for collecting tangible evidence from the Mortgaging companies indulging in malpractices, officials served subpoenas on these companies yesterday. The non-cooperative attitude of the mortgage lenders in sorting out the problem loans, rather than subjecting the properties under foreclosure, as envisaged by the State, warranted this legal action and taken them by surprise.
The subpoenas are issued in the course of seeking evidence on violation of consumer protection laws by indulging in anti-trust, infringement of civil rights etc. by the multiple companies of mortgage industry in multiple levels as well and more than a dozen of them have been served. The specific details of the subpoenas are not made public by the office of the Attorney General yet.

In the meantime, Mortgage Bankers Association, which represents some of the nation’s largest mortgage lenders and its Ohio branch has called for a summit with a view to have a “a frank and open dialogue” on the issue, to be attended by its members, Governor Ted Strickland and other state officials concerned.

In the absence of any lender forthcoming to sign a “compact plan” to address the problems of loan repayment instead of going in for foreclosure, as suggested by Gov. Strickland, there was an alternative plan put forth by Ohio Mortgage Bankers Association on behalf of its members this week. Eventually this is rejected by the Governor as not coming from the individual banks and also lacking in specific details.

According to the spokesman for the office of the Governor, there is no likelihood of the summit happening, in spite of the Governor being ready to talk with the lenders with an open mind. It was further informed that in April, the Governor met with 11 top sub-prime lenders and convened a foreclosure task force consisting of government officials, financial industry representatives and people from non-profit service organizations towards addressing the crisis of growing foreclosures in the State. The spokesman further justified the present action taken in view of the trade association’s request is not meeting the standards for a serious and meaningful commitment emanating from its members that can help Ohioans keep their homes saved from foreclosures.

The statistics on the sufferings of Ohioans is so glaring that according to prominent real estate sources, there are thousands of Ohioans continuing to forfeit their homes to foreclosure and in the third quarter of this year Ohio State ranked 5th in the nation on the rate of foreclosures. As many as 46,818 housing properties went into foreclosure, indicating one foreclosure filing for every 107 households, during that period.

The main reason being the adjustable rates of interest on sub-prime mortgage loans, which escalate rapidly in the subsequent years of repayment to the tune of hundreds of dollars more on monthly installments as against what the homeowners believed to be paying in the initial years of the mortgage loan.

Notably one of the largest holders of sub-prime mortgages in Ohio, Washington Mutual, a Seattle-based bank is among those lenders refused to agree with the plan of the Governor and they say they have a plan of their own, started this spring to help preventing foreclosures.
Ohio bankers association in a statement regretted the attitude of its mortgage serving members in not finalizing a mutually acceptable compact agreement and hoped that some progress is in the making.

Investigation on erring mortgage lenders’ activities is going on increasingly in a number of States. The Government sponsored lenders Fannie Mae and ‘Freddie Mac have not also been spared and subpoenas are announced by the New York Attorney General this week to investigate into the home appraisal practices. Ohio has gone forward as the first State to issue subpoenas directly to the sub-prime lenders and it is appreciated by the observers in the economic field.