Governor grants approval of Mortgage Conciliation Act
STATE HOUSE – Signed into law this week was the Mortgage Conciliation Act, which requires banks and lenders to make a good-faith attempt to negotiate with homeowners before foreclosing on homes in Rhode Island.
Under the new law, lenders would be required to engage a mortgager at risk of foreclosure in a conciliation conference to try to come to an agreement to modify the terms of the mortgage. If the effort is successful and an agreement is reached, the lender would not have to fulfill the requirement again if the mortgager fails to comply within the next nine months. The legislation, sponsored by Sen. Donna M. Nesselbush (D-Dist. 15, Pawtucket, North Providence) and Rep. Raymond E. Gallison Jr. (D-Dist. 69, Bristol, Portsmouth) on behalf of Attorney General Peter Kilmartin, would apply only to owner-occupied residential properties of one to four housing units. If the mortgager does not respond or cooperate with the effort to hold a conciliation conference with the lender, the lender may proceed with the foreclosure process.
“This legislation creates one simple statewide process that will assist lenders and homeowners who are facing unprecedented levels of hardship in these tough economic times,” Representative Gallison said. “Lenders will be able to reduce their liabilities by keeping more properties occupied. It’s a common sense measure that will provide some relief in the midst of the foreclosure crisis and prevent more people from having to turn to a homeless shelter or some other alternative.”
Senator Nesselbush added, “The language in this bill provides crucial tools to homeowners who are facing the possibility of losing their homes. This process provides those individuals with better access to mortgage modifications and any information that could potentially help them keep their homes. Additionally, it creates a uniform standard for lenders and encourages them to reach out to homeowners in a timely manner.”
According to the Mortgage Bankers Association, Rhode Island ranked first in New England and seventh in the nation for new foreclosures in the fourth quarter of 2012, although the number of foreclosures in the state did decline by 23 percent from the previous year.
“The breadth and complexity of issues posed by the national housing crisis are staggering, and it will take a great deal of effort – and commitment – on behalf of our elected leaders, our community partners, the mortgage service providers, and homeowners, to right the market,” said Attorney General Kilmartin. “This important piece of legislation is one more piece of the puzzle, and I commend the General Assembly for its action to protect Rhode Island homeowners. The goal of this legislation is to provide a consistent, effective mediation effort to offer homeowners an opportunity to work directly with their lender on a work-out solution while learning about programs that may assist them in keeping their homes. It is in the best interest of all parties – the lenders, the homeowners and the community as a whole – to find solutions to allow people to stay in their homes, thereby reducing foreclosed properties in our neighborhoods.”
The House bill (2013-H 5335Aaa) is cosponsored by Representatives Kenneth A. Marshall (D-Dist. 68, Bristol, Warren), William W. O’Brien (D-Dist. 54, North Providence), John G. Edwards (D-Dist. 70, Tiverton, Portsmouth) and Agostinho F. Silva (D-Dist. 56, Central Falls). Senators Elizabeth A. Crowley (D-Dist. 16, Central Falls, Pawtucket), Catherine Cool Rumsey (D-Dist. 34, Exeter, Charlestown, Hopkinton, Richmond, West Greenwich), Gayle L. Goldin (D-Dist. 3, Providence) and William J. Conley Jr. (D-Dist. 18, East Providence, Pawtucket) cosponsor the Senate bill (2013-S 0416A).
For more information, contact:
Brenna McCabe, Publicist
State House Room 20
Providence, RI 02903