The Ohio State Legislature last week approved a bill to combat the housing foreclosure crisis.
The Home Foreclosure Prevention Bill places a moratorium on home foreclosures and provides reasonable solutions that would allow families to have the opportunity to save their homes, according to State Rep. Matt Szollosi (D. Toledo), speaker pro tempore.
“Lucas County has the second highest rate of foreclosure in the state, up 15 percent last year,”said Szollosi. “This bill will help keep families in their homes.”
The number of home foreclosures in the state has increased each year for over a decade, according to Szollosi. Last year, there were over 85,000 foreclosure filings. Currently, 4 percent of Ohio mortgage holders are in foreclosure, while over 8 percent are behind on their payments.
“Foreclosures across the county are at an all time high,” said Szollosi. “Given the difficult challenges we face in this economy, and the increase in foreclosures, especially in northwest Ohio, the majority caucus felt it was important to try and help people stay in their homes. Oregon and Toledo have been especially hard hit, and rank in the upper tier for foreclosures in municipal areas across the state. While there are many reputable banks working very, very hard to assist borrowers with modifications to their mortgages, there are still a lot of people hurting and this bill is meant to assist those families.”
Among the eligibility requirements: Homeowners must be paying a minimum of half of their monthly mortgage bills.
The bill’s major provisions include:
•A conditional, six-month moratorium on certain foreclosure judgments;
•A licensing and regulation package for mortgage servicers;
•An information package, which includes a mortgage servicing database, foreclosure notification requirements, and transparency requirements during foreclosure proceedings;
•A $750 foreclosure filing fee that would provide funding for database administration, community redevelopment, financial education, and credit and foreclosure counseling.
“Although I had concerns with the initial version of the bill, necessary modifications were made,” said Szollosi. The modifications included reducing the initial $1,500 foreclosure filing fee to $750, and removing a provision that allowed judges to modify mortgage payments. The latter, he said, is a contract between banks and the public that should remain intact.
“The original version granted judges broad authority to rewrite the terms and conditions of mortgages,” said Szollosi. “That was a provision I was particularly concerned about. A mortgage is a contract. The potential for variances in interpretation of a number of variables, including property and tax valuation, and equity, could so vastly differ from one part of the state to the other, that I had concerns that it would be an untenable standard.”
Szollosi said constituents consider the recession the most serious issue facing the district and the country.
“The housing crisis is a huge issue. The U.S. House and Senate have designated several billions for this specific purpose. The six-month moratorium that passed the Ohio House will help give families time to effectively qualify for the federal assistance,” said Szollosi.
Many of the provisions of the bill are expected to be temporary and give flexibility to all parties during the economic downturn.
The bill now goes before the senate for consideration.