Homeowners facing foreclosure need accurate information

By Janet Byrd, Contributing Columnist

A stable place to call home gives people the chance to build a better life for themselves and their families. The thousands of Oregonians facing the uncertainty of foreclosure have new hope for stability because of recent legislative action.

One out of every five Oregon homeowners is “under water” and owes more on their home than it is worth. One out of 11 is either in default or is 30 days late on their mortgage payments.  These financial strains have repercussions throughout families and communities. Foreclosures are a drain on physical health, and the stress makes family life harder. Because owning a home plays such an important role in maintaining a household’s financial stability, foreclosures have impacts for many years on family opportunities and prospects, including education and employment. Communities are hurt by foreclosures as well — by vacant homes, a loss of community vitality, and decreased home values. The recent Street Roots cover story (“Boarded up,” May11) highlighted the problems caused if these vacant homes are not maintained.

Two big steps were taken in Salem that offer hope: important policy changes that go into effect next month, plus new resources available to homeowners. Together, these have the potential to shift the balance and start Oregon down the path to more stable families and communities.

In early March, in the last hour of the legislative session, policy makers came together to pass Senate Bill 1552, which was then signed into law by Governor Kitzhaber on April 11. This monumental legislation will address the overwhelming tide of foreclosures which has been threatening to permanently undermine the foundations of our state. It provides homeowners facing foreclosure with new tools and access to accurate information which will help equip homeowners to make good decisions about their future.

In May, the Legislature met in Salem for a few days of work. They took another big step forward on this issue and approved a spending plan for part of the $29.25 million that the state received this spring as part of a settlement of a national lawsuit against five large banks. Together, the policy changes plus the monetary resources will create a complete system to protect homeowners from bad practices and give them access to needed resources, information and assistance.

The legislation goes into effect on July 11. After that date, homeowners will be able to ask for a mediation session before their homes can be foreclosed upon. The goal of mediation is to help both parties come to an informed decision, and to resolve the situation without going through the trauma and expense of foreclosure.

Before mediation, both homeowners and lenders will share information with each other, and homeowners will get information about their options and prospects from a housing counselor. Not every homeowner will get to stay in their home, but we expect that many will benefit from the many programs and resources that have been set aside to help with refinancing or with paying down mortgage balances. Homeowners that do end up losing their homes will have more notice and hopefully will be able to negotiate a smooth transition.

Access to understandable and reliable information about options may sound unremarkable, but homeowners facing foreclosure need accurate and high quality information most of all. There have been so many changes in who mortgages and how, and so many alternate solutions proposed, that many folks have given up trying or lost track of changes. Information as simple and critical as which bank owns a mortgage may be hard to find. Mediation will help homeowners get the information they need and will give them access to someone from their lender who is empowered to make decisions about their loan. This simple step has been missing for too many homeowners for too long.

Neighborhood Partnerships and the Housing Alliance are working hard with all of our partners to ensure that homeowners will be able to access the information and resources they need, when they need it. Together, we have envisioned a system with five parts:

1.  Coordinated, strategic outreach to homeowners to inform them about their options and help them access the services they need.

2. Counseling to homeowners through certified foreclosure counselors.  Homeowners can learn more about the basics of foreclosure and their rights and responsibilities, and go on to access one-on-one counseling sessions and assistance preparing for mediation.

3. Mediation with their lender and a neutral third party mediator.  The law guarantees access to mediation.  Mediation can help homeowners understand and realize their options — whether that’s staying in their home, selling through a short-sale, or another option that best meets their needs and circumstances.

4.  Legal assistance for homeowners with lower incomes who need legal advice for more complicated circumstances.

5. Connecting homeowners to other available assistance programs, and ongoing evaluation about what is working for Oregon homeowners and communities

The new foreclosure law has great potential to positively impact thousands of homeowners across Oregon. Together we can create a system that fully utilizes the policy changes and settlement dollars to benefit homeowners in need of assistance and help stop the negative effects of foreclosure on our communities, our economy and our state.

The Legislature’s action in May to provide the initial resources to this system is a huge victory. The Department of Justice and Oregon Housing and Community Services had requested a first investment of $9 million, and will receive $7.6 million. Our plan is to return to the Legislature and report on our progress in September, and request additional needed funds in December. We assume that the Legislature will once again rise to the challenge and take action for Oregon communities.

About: Janet Byrd is the executive director of Neighborhood Partnerships and convener of the Housing Alliance. The Housing Alliance brings together advocates, local governments, business interests and all others dedicated to increasing the resources available to meet our housing needs to support a common statewide legislative and policy agenda.

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