Too often, said Rep. Debbie McCune Davis, D-Phoenix, lenders will misrepresent the position and options available to homeowners who are behind on mortgage payments.
“We have to hold abusive mortgage providers accountable for their unethical practices that are resulting in the problems that we’re seeing today,” she said.
McCune Davis authored HB 2383, which also would require lenders to respond within 30 days to a borrower’s inquiry and forbid the foreclosure of a home that is under a loan modification negotiation.
House Democrats touted that legislation Monday as part of a package foreclosure-related bills they dubbed Homeowner Relief for a Strong Future. Among the 10 bills were measures that would allow homeowners facing foreclosure to remain in their homes as renters under certain conditions and another that would give homeowners 60 days to leave foreclosed homes.
McCune Davis said the plan, which includes three bills she authored, would help address Arizona’s challenges created by foreclosures.
“When a home goes into foreclosure, most often it is resold at a value well bellow what goes on in a market, so every foreclosure actually drags down the value of a neighborhood,” she said.
None of the bills had been scheduled for committee hearings, and some had yet to be assigned to committees.
Jay Butler, a professor specializing in real estate at Arizona State University, said having judges review documents wouldn’t always protect homeowners from fraud.
“There have been screw-ups in states that already have judicial review,” Butler said. “A judge can only look at the documents that are presented to him, so just because you have judges looking at this doesn’t make it any better.”
Butler said a better way to protect people from fraud is providing homeowners more access to counseling from foreclosure experts.
A foreclosure-prevention program by the Arizona Department of Housing offers assistance to homeowners facing foreclosure, for example.
“One of the problems has been the inability of people to generally get an open discussion with qualified people because the system is overwhelming with people asking for counseling,” Butler said.
Other bills on foreclosure:
• HB 2283: Provide evidence of a transfer of title and any contract relating to the sale of a property between a seller and a buyer.
• HB 2626: Would require lenders to notify homeowners if auction sales for their homes are postponed.
• HB 2124: Would gives homeowners 60 days to leave foreclosed homes.
• HB 2123: Would require owners, lessees or occupants to be in charge of the maintaining homes during the foreclosure process.
• HB 2430: Would allow homeowners facing foreclosure to remain in their homes as renters under certain conditions.
• HB 2642: Would require a mediation process to take place before a property may be foreclosed.
• HB 2641: Aims to help protect homeowners facing foreclosure from scams and fraud.
• HB 2632: Would allow tenants to continue renting a property for the remainder of the lease of a foreclosed home or for 90 days, whichever is longer.
• HB 2269: Aims to protect borrowers from fraudulent lending practices and deceiving mortgage brokers.