Cleveland Real Estate News

Governor Strickland  gathered together a Foreclosure Prevention Task Force and charged them with coming up with suggestions to improve the situation. There was  an effort to get service providers of the sub prime variety to  open up discussions and answer specific questions. Interestingly, this ‘white paper’ (do people still call it that?) talks about only one group even responding to the request. The Ohio Mortgage Banking Assn. I gather this lack of response meant it wastime to dig in without them.

Here are the highlights of the Task Force recommendations (which they say is not officially a recommendation but that sounds a lot like typical government speak to me) -

1. The Ohio Supreme Court will encourage courts to use mediation in foreclosure cases.

2. Loan providers are ‘strongly encouraged’ to be flexible in modifying loans. Some ideas being bantered around are fixing interest rates, principle forgiveness, waiving of pre-payment penalties.

3. Using ‘catch up periods’ which I gather means not just allowing late payers to have their financial situation tumble like a snowball as fees and late charges add hundreds of dollars onto an already late bill – this is something I’ve always said is the ‘gut puncher.’ You can’t pay the mortgage so let’s add another $750 on to your bill and let’s see you not pay that too.

4. The ‘freezing’ of ARM rates; basically making rates fixed instead. The recommendations for this seem to be limited to those who are not already late with a payment but take the initiative to call and explain that things are not looking good can you help?

5. Commerce ” may define best practices for loan servicing and loss mitigation and establish incentives for those companies who follow the practices.”

6. Love this one: “utilize information from public databases to identify borrowers who are at risk due to certain types of mortgage products and contact” these borrowers. As a note, The Ohio Finance Agency tried to obtain these lists but there were legal issues – not sure how they will get around this one.

7. Expand the Ohio Home Rescue Program 

8. To preserve (not foreclose) housing and recover already foreclosed properties, put more efforts and monies into using the Low Income Housing Tax Credit and other similar programs.  This I believe translates into tax abatement by percentage based on the kind of rehab an existing property receives.

9.  Additional use of housing counselors and financial literacy programs.

10.  Currently, if you get your loan readjusted, you still owe taxes on what you did NOT pay. So on the legislative side, they are working on providing income tax forgiveness on these loans.

11. Immediately record deeds after a sheriff sale. Currently it can take months, literally. The argument is that the sooner you get the deed recorded the sooner someone else can buy the property and it won’t sit vacant.

12. Require “servicers by statute, rule or other action, to notify borrowers in adjustable rate mortgages at least six months prior to reset.”  I love this idea. Yeah, if you have an ARM you probably should know what you are going to need to have available monthly when the rate resets. But in reality, a notice would be really helpful. They are certainly quick to send notices when you are late. It seems like a no brainer to me. The Task Force is saying the issue is enforcement, how do you do it?

I have more questions for Lou Tisler of NHSGC. I asked him questions over Thanksgiving weekend (not good form on my part in hindsight) and he graciously obliged, I know how dedicated he is to this issue. I’ll be able to post a follow up this week when I have the answers. Hats off to you Lou for providing this report to us.

You can read what I read, the status report from The Task Force, here.  I would love to hear what you think about this, and any other insights you might want to share.  Peace Out – 3C