Wednesday, May 20, 2009

Public Hearing on Mortgage Foreclosures Held

The state House Commerce Committee held a public hearing on legislation requiring mortgage lenders to meet with troubled homeowners before a judge permits a foreclosure. Bank representatives, local officials, a former president judge, lawyers and community activists voiced their opinions on House Bill 1042, which was introduced by Representative Michael McGeehan (D) of Philadelphia. Committee chairman Representative Peter Daley (D) of Washington and Fayette said McGeehan's bill would require the Court of Common Pleas in each county to establish a residential mortgage foreclosure conciliation program to assist lenders and borrowers in achieving a solution other than foreclosure.

Allegheny County's former President Judge Joseph James says this bill would give the borrower less trouble in finding a person with authority at the lending institution, because it requires a name, address, and telephone number of such a person in each seperate case. James adds, though, that current state homeowner assistance programs such as HERO and HEMAP are not being used very much; he says public outreach is needed to determine why, and to determine how it might turn out differently with this bill.

Sheriff William Mullen of Allegheny County says since 2006, despite the economic downturn, foreclosures have been down in his district. He says that southwestern Pennsylvania is coping with the economic situation better than other parts of the state, though, and other parts of the state must be considered. In Pittsburgh, many mortgage foreclosures are coming from unexpected areas, such as Bethel Park, says Allegheny County Assistant Manager Pete Havern. "People just bite off more than they can chew," says Havern.

Brentwood Bank President and CEO Tom Bailey says not only are bankers and other lenders "constantly available" already, but they are required to meet with troubled homeowners already as well -- under the HEMAP legislation that was edited in 2006. Bailey says the lack of time restraints in the bill could cause the foreclosure process to take months longer than need be. "Such a delay in foreclosure process potentially could lead not only to blight... but also to monetary harm to the lender, who would not yet have legal right to physically protect the property that is collateral for default of residential mortgage," says Bailey.

Housing Director Dawn Williams of the Urban League of Greater Pittsburgh says the bill should specify that every county in the state have the same regulations, to make sure nobody is treated unfairly. She also says that often borrowers try to contact their lenders already, to no avail. "They are met with frustration," she says. She adds that attorneys' fees in mortgage situations are also adding to the problem of foreclosures, because they are virtually unlimited under current law.

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