May 26, 2009
As some of you know we have passed foreclosure reform in the State of Colorado (HB 09-1276 Ferrandino – M. Carroll) which gives more notice and opportunities for homeowners to stay in their home through renegotiated loans.
Many of you have also been following federal foreclosure policies as well, so I am cross-posting information from the White House about new federal foreclosure help as well.
The President has just signed the Helping Families Save Their Homes Act and the Fraud Enforcement and Recovery Act into law, landmark pieces of legislation addressing the problems that helped set off the economic crisis we are fighting through now.
The Helping Families Save Their Homes Act expands on the success of the Making Home Affordable Program first announced in February. By reducing foreclosures around the country, the average homeowner could see their house price bolstered by as much as $6,000 as a result of this plan, and as many as 9 million homeowners could get help making their mortgages affordable and avoid preventable foreclosures. This bill makes this help easier to access and take advantage of, helps get credit flowing again, establishes protections for renters living in foreclosed homes, and establishes the right of a homeowner to know who owns their mortgage. It also provides $2.2 billion to address homelessness, helping families be part of the recovery one by one.
March 27, 2009
HB 09-1276 The Foreclosure Relief Act (Ferrandino – M. Carroll) has passed the house on a vote of 40:22 and passed the senate on a vote of 26:8 and is headed to the Governor. While the bill is not a bailout, it facilitates re-negotiation of loans to keep families in their home where there is some demonstrated ability to pay and where the lender be financially better off with a restructured loan than proceeding with foreclosure.
Colorado had 44,000 new foreclosures filed in 2008 and while there have been some decreases in a few counties, some have gotten worse (El Paso, Douglas). Obviously, foreclosures impact us all — whether we realize it or not.
These families are our neighbors, our friends, co-workers, go to our churches, our schools and the loss of a home is a devastating strain on a family, their children (and even pets who are being abandoned).
But the economics impact us all as well. When even 1 home in our community goes to foreclosure, it depreciates the surrounding property values for all of us in "comps" or "comparable rates" that are factored into everyone's appraisals.
We literally can not afford to assume this is someone else's problem. There are a lot of reasons behind foreclosures which can range from sub-prime lending, predatory lending, job loss health care crisis (50% of bankruptcies), divorce, family problems.
WHAT THE BILL DOES
15 days after a foreclosure notice is filed a homeowner will receive a conspicuous NOTICE on their property about:
- The FREE Colorado Foreclosure Hotline: 1.877.601.HOPE, with a 80 – 85% success rate in preventing foreclosure and keeping people in their homes http://www.coloradoforeclosurehotline.org/; and
- Information about the loan deferrment, loan restructuring options through HB 1276.
A homeowner then has 20 days to contact a HUD certified housing counselor to assess whether they are qualified (a demonstrated ability to pay something reasonable) and whether the financial break-even point could be better satisfied with a re-worked loan for the lender according to FDIC lending guidelines.
If not the foreclosure process continues as scheduled. If so, then the parties are given an additional 90 days time to negotiate and restructure their loan to prevent the foreclosure and keep the family in their home and prevent further losses to the lender.
- Contact Your Lender: It may seem counter-intuitive to approach a creditor when you see signs of trouble but most lenders now understand that it is in their financial self-interest as well to re-structure your loan (if necessary) rather than incur the expense and bad debt of foreclosure on their books.
- There Are Back Channels: Your ordinary customer service number may not be the right phone number. You may need to ask for the loss mitigation department or for a contact in foreclosure prevention. The person who answers may or may not know about the right contact. The Colorado Foreclosure Hotline can help you find the right contact information for your lender. (The wrong number may get you a blank and unhelpful response, unaware of any other programs out there).
- Call EARLY: The earlier you call in the process of realizing you will have trouble making a mortgage payment the higher the chances of a successful workout and the better the odds of minimizing harm to your credit and losses to the lender.
- Do NOT Abandon Your Property: Not only does that disqualify you from the foreclosure assistance of the bill but it makes it virtually impossible that you can restructure your loan.
- Watch for Scams! There are a lot of people and predators out there who would prey on people in desperate circumstances. If you have any questions, you can contact the Division of Housing, the Foreclosure hotline or the Attorney Generals office to help sort through the legit v. not.
- ACORN is another good resource for housing advocacy and has a strong Home Defenders program on foreclosures. Aurora ACORN, 9915 E. Colfax, Aurora, CO 80010 email@example.com 303-366-6703.
- Colorado Foreclosure Hotline – FREE! – 1.877.601.HOPE!