Distressed homes owners can now heave a sigh of relief. The Ohio House has passed HB3 which would delay bank forclosures for sale in the state for six months. Also included in the bill is the new foreclosure filing fee of $750 to help fund foreclosure-prevention counseling.
The bill is touted to be a big help to troubled homeowners which will give them ample time to find ways to keep their properties from foreclosures. The bill also aims to encourage lenders to work out solutions with homeowners on how to deal with their mortgage problems. This is indicated in the elimination of the provision which would have permitted judges to alter terms of the loans.
Meanwhile, Coalition of Homelessness and Housing in Ohio executive director Bill Faith praised the bill’s provision that establishes regulation and licensing of mortgage loan servicers. Home loan servicers are responsible for collecting payments from borrowers on behalf of lending institutions and banks.
He said that the provision encourages home loan servicers to foreclose on a property if its owner stops paying mortgages.
On the other hand, the Ohio Department of Commerce will establish standards for loan modifications which would be used by home loan servicers as guidelines to work out terms that would help prevent bank forclosures for sale.
According to RealtyTrac, which monitors the foreclosure market, Ohio placed 11th in the total number of homeowners receiving foreclosure notices in the first three months of this year. For the period, Ohio’s 31,595 foreclosure filings was 1.1 percent higher compared with figures for the same period the previous year. The state’s foreclosure filings reached its peak in October 2007.
Representative Mike Foley lauded his 6-month moratorium bill as the strongest foreclosure prevention measure in the country. He explained that he would have liked judges to work out home loan agreements in cases that showed that a property is valued less than the mortgage owed by its owner. However, criticisms from various sectors forced him to drop the provision from the bill.
Meanwhile, Faith pointed out the limited effectiveness of the bill. He said that for borrowers to become eligible and avoid bank forclosures for sale, they are required to pay at least 50 percent of their regular mortgage payment. Furthermore, community banks and credit unions with no more than $2.5 billion in funds are exempted from implementing the moratorium and new filing fee.
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