Homeowners facing foreclosure often run into a brick wall when they face their mortgage servicer. It’s enough of a problem that S. 702 came about last year to try and regulate the industry and protect people caught trying avoid foreclosure while having to deal with a very uneven playing field. An effort by our legislature to help cure this problem is Senate bill 702. A subcommittee of the S.C. Senate Banking and Insurance Committee scheduled a hearing for the bill, but the hearing was cancelled.
Financial industry lobbyists strongly opposed S. 702 long before it could come before the legislators for a vote. Therefore today S. 702 is still sitting and waiting to be reviewed, maybe in 2013.
If passed, S. 702 would ensure that consumers are protected from shoddy or fraudulent loan servicing practices. The bill asks for transparency of the actions between the mortgage servicer and the mortgage holder; reasonable consumer friendly loan modifications, accountability for all lost paperwork on loan modifications; and, disclosure to the homeowner who it is that holds their mortgage. It says that when the servicer isn’t responsible, that the holder of the mortgage is.
Forty-five days prior to filing a foreclosure action, the servicer shall send a certified letter that includes: 1) an explanation at a fifth grade reading level, 2) itemization of all past due amounts and cause for the default, 3) itemization of what must be done to make the loan current, 4) options available to the homeowner to avoid foreclosure, 5) contact information for the servicer AND the mortgage holder, 6) contact information for homeownership counseling agencies, and 7) contact information for regulating agencies. Finally, a court may award penalties up to $10,000 in fines for violations of this act.
This bill would hold a mortgage service provider liable if its agents violated these proposed regulations.
Time is important when facing foreclosure and looking for options to try and save one’s home. According to AARP, many of South Carolina homeowners facing foreclosure are people in their 50s and that means they don’t have a lot of working years to recoup from this financial disaster.
I think the S.C. Banking and Insurance Committee needs to be proactive and do everything it can to get this industry regulated. Please contact your senator and tell him you want the bill reviewed as soon as possible.
The writer lives in Myrtle Beach.