Foreclosure Prevention Legislation - House Bill 3

By Denise Driehaus

If Ohio's economy is to recover, we must take action to combat the devastating impacts of the home foreclosure crisis.

If Ohio's economy is to recover, we must take action to combat the devastating impacts of the home foreclosure crisis. That is why I co-sponsored House Bill 3, Mortgage Foreclosure Crisis Legislation, to address this critical issue.

Last year marked the thirteenth consecutive rise in foreclosures statewide, and many of our counties have seen rates rise by more than 50% since 2004. According to Realty Trac Inc., Ohio reported over 113,000 properties in some form of foreclosure last year, up 26 percent from 2007 and more that double the pace in 2006.

These foreclosures not only involve the family living in the home, they also have a negative financial impact on the surrounding neighborhood as property values decline. Cities bear the cost of trying to secure these properties through code enforcement, boarding, demolition and safety runs. In addition, the loss of tax revenue from these properties has a negative impact on the school districts.

It is time for the Legislature to act.

The Ohio House passed House Bill 3 this week, which does call a time out on foreclosures and provide reasonable solutions for families to stay in their homes.

House Bill 3 includes three primary strategies to deal with foreclosures.

The first of the three strategies is a six month moratorium. During the moratorium, the borrower must pay half of their monthly mortgage payment to the servicer, so that they remain actively engaged in the process during the six months. If the borrower doesn't make their payments, the moratorium does not apply. The moratorium includes 1-4 unit residential properties and does not include vacant properties. In recognition of the work the majority of small banks and credit unions are already doing to keep their borrowers in their homes, they are not included in the moratorium. Importantly, the moratorium will allow Ohioans to take advantage of federal foreclosure prevention dollars as they become available.

The second is to license the servicers operating in the State of Ohio. This will allow the administration to track the trends of the servicers and encourage workouts. Servicers act as agents that function between the lenders and borrowers.

The final strategy levies a $750.00 foreclosure filing fee. The fee will be used for the construction and maintenance of the servicer database, foreclosure prevention counseling, fraud investigation and remediation of blighted properties through rehabs and teardowns. The small banks and credit unions will not have to pay this fee.

We cannot save every home owner from foreclosure, but it is incumbent upon us as State Legislators to make sure the process is fair and open, and that the end result is in the best interest of the citizens of Ohio.