November 14, 2018
Rhode Island’s Decision to Extend Homeowner Foreclosure Protections
In the wake of 2010’s mortgage foreclosure crisis, Rhode Island—whose previous regulations had been fairly lenient toward lenders with regard to how much time and information they were required to reveal to foreclosed homeowners prior to selling properties at auction—passed the Foreclosure Mediation Act of 2013. Its purpose was to require lenders to give mortgagees who had fallen behind on their payments an opportunity to meet with the lender and an independent, professional mediator from Rhode Island Housing in order to form an agreement aimed at preventing foreclosure. It was a sign of the times, as the number of foreclosures in Rhode Island, as with most everywhere else in the country, had gotten out of hand—growing to nearly 10,000 in number before all was said and done—which threatened to send the local real estate market further into a downward spiral.
On May 22nd the Rhode Island Senate unanimously passed a bill extending the consumer protections enshrined in the Foreclosure Mediation Act for another five years.
Lenders are understandably concerned about this turn of events, since Rhode Island is mostly out of the tall weeds (so to speak) of the foreclosure crisis. The extension bill does cut the filing fees owed by lenders by $50 per event, but that nonetheless leaves the filing cost at $100, and the bank must fork out another $350 for each round of mediation services if they go forward.
As cost-cutting goes, fifty dollars less per event is practically a pittance. The Rhode Island Banker’s Association estimates the costs to lenders springing from the program to have totaled around $7 million to this point in time—and that for only actually having prevented around 679 families from losing their homes.
Still, it’s worth noting that Rhode Island’s foreclosure rate does remain higher—by around a factor of four—than it was before the crisis started. The unanimity behind the bill reflects a desire on the part of Rhode Island’s legislature to protect its homeowners and do the best they can for the state’s citizens. And that’s something property owners can feel good about.
An experienced closing firm like Topouzis & Associates, P.C. can perform a thorough title search on any property, whether in Cranston, Rhode Island; Boca Raton, Florida; or Cambridge, Massachusetts, and can provide a title insurance policy to handle any lurking issues that should arise after closing. Whether you’re a lender, realtor, or prospective home buyer, feel free to contact us.