Senate votes to extend foreclosure mediation law
STATE HOUSE – The Senate today approved legislation sponsored by Sen. Harold M. Metts to add five years to the life of an expiring law that helps stave off foreclosure for many homeowners.
The bill, which Senator Metts submitted on behalf of Attorney General Peter F. Kilmartin, extends a July 1 sunset provision in a 2013 law that requires mortgage lenders to initiate and participate in mediation efforts with homeowners facing foreclosure in an effort to prevent it. The bill moves the sunset provision to July 1, 2023.
The legislation (2018-S 2270A) now goes to the House of Representatives, where Rep. Mary Duffy Messier (D-Dist. 62, Pawtucket) is sponsoring companion legislation (2018-H 7385).
Senator Metts said the law provides critical protection for homeowners, requiring their lenders to make a good-faith effort with the help of an independent mediator to try to come to an agreement to that helps save their homes from foreclosure
“Foreclosure devastates families and neighborhoods. Mediation helps people find ways they can save their homes and all that they’ve invested in them. Rhode Island and our communities were hit very hard by the foreclosure crisis, and this act made a real difference in stemming that tide and preserving families’ homes. While I hope to see this provision made permanent, extending it for another five years will help many more Rhode Islanders avoid foreclosure, stabilizing their families and neighborhoods,” said Senator Harold M. Metts (D-Dist. 6, Providence).
According to RIHousing, which administers the program, over 70 percent of homeowners who have taken advantage of the opportunity for mediation are able to reach an agreement that allows them to stay in their home.
“While the big banks may be classified as ‘too big to fail,’ too many Rhode Island families remain one financial setback from losing their biggest investment — their home. This act ensures homeowners have a seat at the table to directly negotiate with the mortgage lender regarding the terms of the mortgage that may result in an agreement that avoids foreclosure, which is beneficial for all — families, communities and the banks,” said Attorney General Kilmartin.
Before the law took effect, Rhode Island had one of the least restrictive foreclosure procedures in the country. Lenders were merely required to provide notice to the homeowner of their intent to initiate foreclosure, and public notice of the foreclosure in the newspaper. There was no required court involvement and no requirement that lenders meet with borrowers to explore alternatives to foreclosure.
At the time, homeowners across the state were struggling with unemployment or underemployment, and with few protections in place, many lost their homes to foreclosure. Those foreclosures had a devastating impact, not only on families who lost their homes, but also on the greater community. Foreclosed properties often mean increased crime, declining property values and reduced quality of life for all residents.
While not all eligible homeowners participate in the mediation process, those that do are often able to remain in their home. Since the act became law in 2013, 990 homeowners have sought mediation. Of those that complete the process, approximately 50 percent resulted in homeowners receiving a loan workout from their mortgage provider, with another 24 percent ending without the mortgage provider receiving certification needed to proceed to foreclosure.
The bill is cosponsored by Sen. Ana B. Quezada (D-Dist. 2, Providence), Sen. Elizabeth A. Crowley (D-Dist. 16, Central Falls, Pawtucket), Sen. Dawn Euer (D-Dist. 13, Newport, Jamestown), and Sen. Paul V. Jabour (D-Dist. 5, Providence).
For more information, contact:
Meredyth R. Whitty, Publicist
State House Room 20
Providence, RI 02903