The Indiana attorney general says financially stressed Northwest Indiana families need all the protection they can get from mortgage companies racing to foreclose on them.
“I fought long and hard against these mortgage bankers who want to go back to business as usual,” Greg Zoeller said last week.
He said he is lobbying against legislation that would terminate an earlier law that formalized the Mortgage Foreclosure Trial Court Assistance program, a homeowner protection program created during the mortgage crisis since 2010 and still helping thousands of Hoosiers this year.
“There were 1,900 distressed borrowers in Lake County who got a settlement conference, and there were 839 people who got to stay in their homes,” Zoeller said.
Tom Dinwiddie, an attorney representing the Indiana Bankers Association and Indiana Mortgage Bankers Association, said, he and his clients are disappointed in the attorney general’s opposition to their legislation.
“Foreclosures take longer in Indiana than in most other states,” said, citing the AOL Real Estate website, which ranks Indiana the 8th “Best State to Default on Your Mortgage,” because it takes 601 days to complete foreclosure. Illinois is ranked fifth with 697 days.
The legislation at issue is an amendment to Senate Bill 451.
Zoeller said bank lobbyists are trying to convince legislators the state program is no longer needed because of new federal protections offered under the Consumer Financial Protection Bureau, a federal agency providing consumer information, supervising financial companies and enforcing federal consumer financial laws.
Sam Gilford, a spokesman for the bureau, said they imposed new regulations in January 2014 requiring mortgage company representative either to call or personally meet with homeowners within 36 days of a missed mortgage payment.
Gilford said, “The mortgage servicer has to tell the borrower about any loan modification or workout options available and before a borrower hits 45 days of delinquency, the servicer has to send them written notice providing contact information, examples of loan modification options and explain how the borrower can find a housing counselor.
“The lender can’t file for foreclosure until the borrower is more than 120 days in default and if the borrower has submitted a complete application for mortgage assistance, the foreclosure process cannot begin while that evaluation is underway.
“There were problems in the past when borrowers sent in some information and thought they had completed the application, and the servicers said it was incomplete and moved ahead with foreclosure,” Gilford said.
Dinwiddie said, “The federal process is going to help a lot more people, because it happens much earlier in the process. It’s a lot harder to fix a problem when a longer period of time has gone by, which is what happens in the Indiana procedure. The state law would never have been enacted if the federal regulations had been in place earlier.”
Zoeller said the state procedure is better, because a judge sits over it with the power of the court to enforce the agreement.
“Over the years, it has singularly been the best help for people facing foreclosure who may have other options, but can’t get anybody to sit down and talk about it with them,” he said.
Toyia Moore, of the Consumer Credit Counseling Service of Northwest Indiana Inc., said she thinks there is room for both federal and state assistance for homeowners, because many region homeowners live on the margins.
“There are a lot of people who come into the office with 8 percent, 9 percent and 10 percent interest rates. While there are more jobs than in past years, there is still underemployment, and they aren’t paid enough to meet their payments,” she said.
