Journal

Foreclosure Crisis Calls for Lending Reform

Foreclosure Crisis Calls for Mortgage Lending Reform in Virginia: HOME encourages General Assembly to take a closer look

By Connie Chamberlin, President/CEO, Housing Opportunities Made Equal of Virginia, Inc.

The regular session of the 2008 General Assembly has ended, and the lawmakers have gone home. In the midst of the most devastating housing and mortgage lending crisis since the great depression, what did they do to help Virginia homeowners and protect Virginia’s borrowers? The answer, I’m afraid, is “not much.”

The good news: the Governor sent down a bill to give those homeowners in very high cost loans information about foreclosure prevention counseling and a grace period to allow them to work out a solution with their lender and avoid foreclosure. Unfortunately, this bill was watered down in the House of Delegates.

Also good news: Delegate Terrie Suit (R) of Virginia Beach introduced legislation that passed both houses that requires criminal background checks for employees of mortgage brokers and gives the Bureau of Financial Institutions the authority to enforce some provisions of the federal Real Estate Settlement and Procedures Act; and Dels. Glenn Oder (R- Newport News) and Sal Iaquinto (R-Virginia Beach) introduced a bill to protect homeowners from some of the more egregious foreclosure rescue scams that strip equity – and sometimes take the house – from vulnerable homeowners in default. Both of these bills are on their way to the Governor for his signature.

But what of all the practices of the lending industry that led to these problems in the first place? What about the abandonment of rational underwriting standards? Or the steering of unsuspecting borrowers to high cost loans when they qualified for prime loans? In fact, a number of very good bills were introduced that would have provided substantial protection for Virginia borrowers and gone a long way to ensure a healthy financial market. Unfortunately, most of them didn’t even make it out of committee. None of these bills made it into law. Most of them were not actually “killed” – the General Assembly is always much more polite than that. Most of them, in fact, were sent to the Virginia Housing Commission for further study (how much study is required to conclude that borrowers should be given the best loan for which they qualify, as Senator Martin (R-Chesterfield) proposed in SB 709). The Virginia Housing Commission does good work, and is a good venue to reconcile opposing viewpoints. But sometimes sending a bill there is simply a way of avoiding making a tough decision.

Why is all of this so important now? It’s important because of the state of the Virginia housing market, and the number of Virginians who may lose their homes.

HOME came to the 2008 session offering real solutions. And we’ll be back next year to advocate for policy improvements like fiduciary responsibility for mortgage brokers so they don’t steer borrowers into unsuitable loan products, as well as additional protections for subprime loans like required escrow for taxes and insurance, better verification of income, and less restrictive prepayment penalties. These and other resolutions are the best answer to the problems we see in the mortgage market.

(Our 2008 Legislative Outcomes Report and information about HOME are available at www.phoneHOME.org nad click on action center)

Connie Chamberlin has been President/CEO of Housing Opportunities Made Equal of Virginia for 20 years. HOME is nationally recognized for the quality of its housing counseling and fair housing work, and its role in increasing housing choice and improving communities. HOME is a highly visible and respected advocate for policies that promote equal treatment and the importance of decent, affordable housing in neighborhoods of opportunity.

Posted by Connie Chamberlin on Tuesday, April 08, 2008 at 15:32

Affordable Housing For All ls HOME's Goal

(Orginally appeared in the Richmond Times-Dispatch section "Letters to the Editor" July 21, 2007.)

Editor, Times-Dispatch:

As a member of the Housing Opportunities Made Equal (HOME) Board, I was pleased to see Bart Hinkle's Op/Ed column on our recent survey. He was kind enough to share his answers to the various questions and we will certainly honor them as we evaluate the survey.

I'd like to respond to one of his answers in particular. Hinkle took to task our use of the word "affordable." He purports that each of us has a choice in the housing market. He has chosen a journalistic profession which, as he stated, limits his housing choices to something less elegant perhaps than one whose chosen profession produces more income. He does, however, have a much wider range of choices than the people HOME advocates for.

In a recent Times-Dispatch article, "Area's Needs are Widening," George T. Drumwright Jr., Henrico's deputy county manager for community service, speaks of the lack of affordable housing for low-income families. It puts a different dimension on Hinkle's economic theme: There are many people in our region who literally cannot afford a home that adequately accommodates their family. Some of these families are the bread and butter of our work force, including our police and fire personnel. These working Virginians have made a career choice to serve us, yet they cannot afford -- because of the high cost of housing and the limited numbers of homes available -- to meet their housing needs in the areas in which they serve.

This is the dimension HOME is deeply concerned about. We work to expand the availability in our region of housing that persons with low income can afford -- they deserve choice, too. HOME's mission to ensure equal access to housing for all people requires us to create and sustain alternatives that are affordable.

J. Fletcher Lowe. Richmond.

Posted by David Sharrar on Monday, July 30, 2007 at 13:47

State foreclosures increase 411% in May

According to the Monthly U.S. Foreclosure Market Report published by RealtyTrac, an online source for foreclosure sales, Virginia foreclosures shot up 411 percent in May as compared to the previous year. This far exceeds the national rate of increase which was 90 percent from the previous year. So far in 2007, the state has moved up 14 places to the state with 25th highest foreclosure rate in the nation.

“After a barely perceptible dip in April, foreclosure activity roared back with a vengeance in May,” said James J. Saccacio, chief executive officer of RealtyTrac. “Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year. Certainly not every community nationwide is seeing an increase in foreclosures, but foreclosed properties are becoming more commonplace and adding to the downward pressure on home prices in many areas.”

In May HOME projected at least 10,000 foreclosures will take place in Virginia for the year. With no signs of slowing down, the number could easily reach 15,000. If you have trouble making house payments or know of someone that is, do not hesitate to get in touch with one of HOME’s mortgage default counselors. More information about HOME’s programs is located on this website.

Source: RealtyTrac June Newsletter

Posted by David Sharrar on Wednesday, July 11, 2007 at 11:25

House buyout deals too good to be true

The link below is a good article from the Washington Times on the foreclosure buyout process and some of the ways homeowners can lose their homes to unethical home buyers who specialize in foreclosure sales. It also features HOME's own Mike Burnette. For more information on what homeowners can do to prevent the loss of their home, a brochure on HOME's mortage default program can be downloaded from this website.

House buyout deals too good to be true

Posted by David Sharrar on Monday, April 30, 2007 at 10:34