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Senator Werk Introduces
Foreclosure Rescue Scam Bill
BY JOE ESTRELLA - jestrella@idahostatesman.com |
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The bill is meant to address a problem resulting from an explosion in Idaho foreclosures last year. Idaho had 6,032 foreclosure filings in 2007, a 141 percent increase from 2006, according to RealtyTrac.com, a Web site that tracks foreclosures nationwide.
Scam artists sometimes try to trick desperate homeowners into signing over their homes.
The bill was introduced by three Boise Democrats: Sen. Elliot Werk and Rep. Bill Killen, both of District 17 on the Bench, and Rep. Phylis King, of District 18 in Southeast Boise.
Just because a bill is printed, however, does not mean it will become law. The bill must go through a hearing before the Senate Commerce and Human Resources Committee. Werk said he expected representatives from the Idaho attorney general's office and the Department of Finance to take part. A hearing date has not been set.
The bill would require contact information for assistance and a warning about scams when foreclosure notices are served. It would require written contracts from foreclosure rescue service providers. Homeowners could opt out of a foreclosure rescue contract within five days of signing.
Werk said the proposal would not affect or restrict real estate business practices.
Dawn Justice, president and CEO of the Idaho Bankers Association, said the group had reviewed the proposal and determined that it would not affect the banking industry.
In a nod to Idaho's growing Hispanic community, the bill includes a provision calling for a Spanish language notification of foreclosure if the original loan documents were drawn up in Spanish.
"If you negotiated a contract in Spanish, we want to provide information concerning foreclosure scams in the language you're most comfortable with," Werk said.
That provision drew applause from two Hispanic leaders. "Because the contracts are in English, and that's how people get in trouble in the first place," said Alice Mondragon Whitney, a local banker.
She said that in California consumers can request that the initial loan documents for a home be in Spanish.
Sam Byrd, director for the Centro De Comunidad y Justicia (the Center for Community and Justice), said the proposal was aimed at unscrupulous lenders.
"Unfortunately, there are a lot of people out there engaging in predatory lending practices," Byrd said.
Many of Idaho's foreclosures are being blamed on adjustable rate mortgages that use "teaser" rates to lure consumers. After a specified time, the rate jumps dramatically, often beyond the consumer's ability to pay.
According to Home Mortgage Act data compiled by the Center for Responsible Lending, in 2006, the last year for which statistics are available, 4,554 home loans worth $544 million were made to Hispanic consumers in Idaho. Of those, 1,661, or 36.5 percent, were subprime loans valued at $173 million.
Joe Estrella: 377-6465
