By Gary Burris, Senior Policy Associate
The mortgage crisis has hit millions of Americans. Most recent estimates show that 23% of home owners nationwide owe more than their homes are worth – including tens of thousands of Washingtonians.
Banks used unethical tactics to get people into loans that weren’t in their best interest, inflated the prices of homes by flooding the market with money that was easy to obtain, and then sold securities based on those overvalued homes. All of which, in combination, brought the US economy to its knees. We also know the banks got bailed out because they were “too big to fail.” And since the bailout, the banks have tightened up lending, further damaging the economy, while looking for new ways to increase fees on customers to pad their bottom line.
The big banks have been no friend to consumers. So it should be no surprise that homeowners have experienced incredible frustration in trying to refinance mortgages. Many homeowners simply want to adjust their payments so they can stay in their home, without being forced into foreclosure.
The stories are numerous of lenders and mortgage holders running home owners through months of on-going phone calls, multiple submissions of the exact same paperwork lost by the lender, and even trial modifications that the home owner fully meets – only to have the bank foreclose on their home. Thousands of Washington homeowners have put in months – sometimes years – and hundreds of hours trying to work through the bureaucracy of the financial institutions, only to be denied the opportunity to refinance.
Fortunately for homeowners, legislators like Representative Tina Orwall are looking out for them. While too many other legislators have got the back of the banks, Representative Orwall is looking out for the rest of us. Sponsored by Rep. Orwall, House Bill 1362 requires mortgage lenders to sit down with homeowners to see if a loan modification can be made.
Housing counselors will be funded to help with this process through a new fee on every foreclosure filed by a bank. When the home owner and bank actually sit down and talk through the details, in most cases a resolution is reached that all parties accept. Many times, that means a refinanced home loan. In other cases, it means the home owner leaves their home, but they do so willingly, knowing a good faith effort was made to find a solution and that they simply couldn’t afford the home.
HB 1362 passed the Washington state House last week and is moving on to the Senate. Contact your state senator and encourage them to support House Bill 1362, protecting home owners and helping to get our economy back on track.
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