Several days ago, I received an e-mail from a distressed constituent in Bonney Lake who is faced with losing his home to foreclosure. He’s an upstanding citizen, pays his taxes, volunteers in the community and is a real estate agent who operates his own small business. He’s also been hit very hard by the downturn in the economy, especially as housing sales plummeted. As his sources of income began to evaporate with the housing crisis, he began having trouble making his house payment. Seeing little options, he turned to the federal government’s foreclosure prevention program through his bank.
“I started a loan modification in March 2009. Within the last year, I have had to submit the entire loan modification package three times,” he writes. “I was on a temporary reduced payment for six months. In February, I was denied the loan modification, even though I clearly proved my income. I counseled with a loan modification attorney, who said it should work. However, the bank refused reduced payments and now I am faced with losing my home.”
This is a man who has played by all the rules and with his Realtor background is knowledgeable about home sales and financing, has earnestly tried to work with his bank, and has desperately sought help without success. I wish I could tell you his case is exceptional. It is not. Sadly, throughout our communities, there are many similar stories of lost paperwork, mortgage modifications allowed and then rescinded, or lower payments temporarily granted, only to be followed by the foreclosure process. My office continues to be inundated with similar calls and e-mails from good people who are trying to keep their homes.
As the number of foreclosures fell 2.40 percent across the nation in April, here in Washington state it’s a different story. Foreclosures were up 40.04 percent in April over the previous month and nearly 30 percent higher than one year ago. Overall, 4,365 properties in Washington had foreclosure filings. That’s one in every 640 properties. And foreclosure rates were highest in King and Pierce counties.
The federal government’s attempts to help distressed homeowners have been disappointing. More than $75 billion was earmarked last year through the Homeowner Affordability Modification Plan to help struggling homeowners restructure their housing debt. Of those who applied, only 17 percent were helped and most of those fixes were temporary.
Home ownership is part of the Great American Dream. But when foreclosures take place, everyone in the community suffers – the homeowner, neighbors, and yes, even the lender, and it becomes the Worst American Nightmare.
It’s time for reasonable people to come together and create alternatives to foreclosure so that good people who have fallen on hard times can still keep their homes.
That’s what happened in Philadelphia where a large number of homeowners were facing the loss of their homes due to their inability to pay their mortgages. The civil court adopted a program where owner-occupied residential properties in default that would otherwise be scheduled for sheriff’s sale (one of the last steps of foreclosure) would have to go through a “conciliation conference” prior to sale of the property. Through this program, a judge could require the parties to meet and try to work out an arrangement agreeable to both parties, similar to arbitration proceedings. Since the program was launched in June 2008, more than 2,000 people have reached permanent solutions to keep their homes. An additional 3,500 homeowners are on track to reach agreement.
The program has been so successful, it is being duplicated in Boston, Chicago and all of New Jersey. So why not here in Washington?
Many people are asking if our Legislature could adopt this program. I’m concerned that if we wait until the Legislature convenes next January, it will be too late for many people now entering foreclosure. Plus, there’s no guarantee that legislation would pass next session. The home mortgage crisis is today and we need action now!
That’s why I’m calling for leaders in our local Superior Courts and bar associations to review this program for possible implementation in our communities. Perhaps a mortgage arbitration system through our Superior Court system would allow cooler heads to prevail by helping terrified homeowners meet face-to-face with concerned lenders so they can sort out key issues on the spot.
If you are a member of the Washington State Bar Association, I invite you to read more about the Philadelphia program at: http://fjd.phila.gov/mfdp/ and then contact my office at 360-786-7846. I’d like to work with you to see how similar solutions could be implemented in Washington.
If you are a homeowner nearing foreclosure, I encourage you to take advantage of current in-state programs. The Washington Web site is: www.homeownership.wa.gov.
Finally, if you would like to share your story or have ideas about solving this housing crisis, please contact my office at the number above. Together, we can find alternatives that will help good upstanding people, like our Bonney Lake Realtor, keep their homes and preserve the Great American Dream.
Rep. Dan Roach is in his fifth term in the House of Representatives, serving the 31st Legislative District. He is a member of the House Financial Institutions and Insurance Committee.
