As more and more foreclosures take place in Delaware, lawmakers are discussing how to take on the problem without increasing the burden on a state government already facing a heavy workload.
A five-bill package addressing the foreclosure issue awaits action in the Delaware General Assembly. Citing estimates that each foreclosure costs the state about $34,000 in lost taxes, property devaluation and other expenses, State Representative John Kowalko (D-Newark South) says there may need to be some state investment into foreclosure prevention and mediation.
“The first step in any recovery is to have the housing market recover,” Kowalko said.
Kowalko is listed as a prime sponsor on all five bills – along with House Speaker Robert F. Gilligan (D-Sherwood Park), State Representative Helene M. Keeley (D-Wilmington South), Representative Michael Ramone (R-New Castle), and State Senate Bethany Hall-Long (D-Glasgow). House Majority Whip Valerie Longhurst (D-Bear) is co-sponsoring all five bills.
State Representative Ramone says there were more than 6,000 foreclosures in Delaware in 2010. He believes offering protections and clear guidelines for consumers and lenders will “go a long way to remove some of the apprehension consumers face from an already painful process.”
State Representative John Kowalko (D-Newark South) on foreclosure bills package
Kowalko explains some of the areas the package of bills attempts to address.
Kowalko says dealing with the foreclosure crisis remains a work in progress.
Attorney General Beau Biden took part in the drafting of the five pieces of legislation.
-One measure would create an automatic mediation program for homeowners after a foreclosure complaint is filed. Litigation would be suspended during a mediation process. Homeowners facing foreclosure would be guaranteed face-to-face meetings with representatives of their lenders. The hope is to explore options short of a sheriff’s sale.
-Lenders would also be required to provide notice of any foreclosure to borrowers as well as inform them of any assistance available to them. Lenders also would be required to provide an affidavit stating that loss mitigation was considered before a judgment could be entered. According to Kowalko, much of the current outreach is conducted by volunteers.
-Part of the legislation would require registration and bonding of mortgage modification companies and protect consumers from any advance fees.
-An office would be created in the Attorney General’s Fraud and Consumer Protection Division to oversee and monitor foreclosure prevention activities. Office personnel would act as a liaison with lenders in difficult cases.
-The filing of a false foreclosure document would be treated as a deceptive trade practice.
“We’re working to ensure everyone plays by the rules,” Biden says.
Ramone and Kowalko say it may be possible for the state to shift personnel around to perform foreclosure-related duties while not incurring additional expense. A fee structure is also being negotiated with area banks to offset costs of the foreclosure notification and mediation process.
Even so, Kowalko says, “an investment of taxpayer money to halt this deterioration in the housing market is money well spent.”
