As US foreclosures mount, states step in
New laws aim to prevent fraud, and states are creating task forces and designating funds to deal with the issue.
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"There was a lot of distress in the voices," says Rita Parise, program director. "Some we may be able to help, but numerous people were well into the foreclosure process, and we will not be able to help them."Skip to next paragraph
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Initially, the agency is estimating the new pool of money will provide refinancing for about 1,000 mortgages. "If the demand is there, we will go back in the market again and again," says Doug Garver, the agency's executive director.
While the financing could help, some Ohio officials believe even more urgent action is needed. In fact, Monday was the deadline for Cuyahoga County (Cleveland) residents to ask for property-value readjustments. Officials are expecting 50,000 homeowners, about 10 percent of the city's residents, to ask for downward revisions of their taxes.
Cuyahoga County Treasurer Jim Rokakis says communities need to work together with the mortgage service companies to head off more foreclosures. "I don't care if you want to call it a moratorium, or a cooling-off period. But for this to be most effective, we have to find a way to get them to agree to back off on adjustable-rate mortgage interest [hikes], and back off on foreclosures."
Laws to reduce fraud
The instances of fraud by so-called mortgage consultants who promise to save homes from foreclosure have grown along with foreclosure rates. New York is one of a dozen states, including California, Colorado, Florida, Georgia, Illinois, and Michigan, that have enacted laws putting limits on mortgage consultants.
"Foreclosure rescue fraud is now rampant across the United States," says Carolyn Carter, an attorney with the National Consumer Law Center in Boston. "In some parts of the country, whole neighborhoods are affected."
One such area is Queens in New York, where Phyllis Schiever-Ford, a retired social worker, lives with her extended family. She has an adjustable-rate mortgage. When her interest rate jumped to more than 8 percent, she got behind on her payments and this week was served with a foreclosure notice. "What I need is to get back on sure footing, and I'm getting there," says Ms. Schiever-Ford.
She's working with lawyers at St. John's University Elder Law Clinic to negotiate a solution. But the clinic is busier than ever. This week, the phone "has been ringing off the hook," according to Gina Calabrese, associate director of the clinic.
"Whenever our clients go into foreclosure, they're inundated with letters and notices from people promising to rescue their homes from foreclosure," says Ms. Calabrese.
New York's new law requires a warning about potential fraud to be included with the foreclosure notice. When a home is to be sold, the law also requires a written contract that spells out payments to be made, who will hold the deed, and any other buy-back or rental agreements. In addition, it gives homeowners five days to cancel any contract after it's been signed.
"Because it is so new, we don't know how it's going to work," says Ann Goldweber, director of the Elder Law Clinic. "It may not be a perfect solution, but it's certainly a step in the right direction."