Ohio Places Moratorium on Pending Foreclosures
Ohio is fed up with continued pace of foreclosures – a House panel has placed a six month moratorium on foreclosures. To deter the process the bill has also increased the fees for filing. The ultimate target is to see that the lenders and borrowers amicably work out the problem.
The residents of Ohio will get a six month respite from foreclosures but the provision that would have allowed the judges to alter terms of the mortgage was cancelled. But supporters of the bill are happy that at least something has been won – it being better than nothing. The House Bill 3 will impose a new fee of $750 for filing foreclosures. The money would go towards funding counseling for foreclosure prevention.
Bill Faith of Coalition on Homelessness and Housing of Ohio pointed out that according to the bill, new licensing and regulations have been introduced for those who service home mortgages and collect payments as representatives of the banks and other types of investors who are holding the mortgages. Loan modification standards would be worked out by the Ohio Department of Commerce stating guidelines for loan modifications. Faith added, “Now, servicers are incentivized to foreclose if a person stops paying. There is no incentive to work it out.”
Ohio ranked 11th in the number of foreclosure notices posted during the first quarter of 2009. In the state there were 31,595 foreclosure listings – 1.1% higher than during the same period of 2008 as per the findings of RealtyTrac. The foreclosures peaked in Ohio during October 2007.
In Franklin County the foreclosure numbers spiked to 9,300 in 2008 from 6,000 in 2004. Ed Leonard supported the bill and said it “will give lenders time and greater incentive to work out new payment terms with homeowners.”
This bill has been dubbed “the strongest, most progressive foreclosure prevention bill in the United Sates” by Rep. Mike Foley (Democrat).
Faith however feels that the clauses of the bill would make it limited in its effectiveness. Only those borrowers would benefit who could spare at least half the current mortgage amount. Also some credit unions and community banks whose assets are below $2.5 billion are exempted from the moratorium as well as the enhanced filing fee. Foley explained, “These guys are bending over backward to work with borrowers. Unlike the big guys, who could care less.”
Foley wanted judges to be empowered to alter mortgage terms when the loan had gone underwater but in the face of opposition from powerful interested parties he had to go reverse gear.
