R.I. AG's mortgage conciliation legislation before House committee

Jessica M. Karmasek Apr. 10, 2012, 8:00am


PROVIDENCE, R.I. (Legal Newsline) - Rhode Island Attorney General Peter Kilmartin has submitted legislation to the state's General Assembly requiring mortgage service providers to participate in a conciliation process administered by a HUD-approved independent agency.

Kilmartin said the goal of the process to is to help the lender and homeowner come to an agreement, thus avoiding foreclosure.

The legislation, House Bill 7842 and Senate Bill 2684, is sponsored by state Rep. Richard Morrison and state Sen. Donna Nesselbush, both Democrats.

The House version is scheduled for a hearing Tuesday before the House Judiciary Committee, Kilmartin's office said.

"The goal of this legislation is to provide a consistent, effective conciliation effort to offer homeowners an opportunity to work directly with their lender on a work-out solution while learning about programs that may assist them in keeping their homes," Kilmartin said in a statement.

"It is beneficial for the homeowner, the mortgage service provider, and the community at large to find a way to keep people in their homes."

The legislation would require loan servicers to engage what the attorney general calls a "conciliation conference coordinator" at a U.S. Department of Housing and Urban Development-approved independent counseling agency prior to finalizing the foreclosure process.

The conciliation conference is offered at no cost to the homeowner or the State, Kilmartin noted.

In doing so, the homeowner is given an opportunity to directly engage a representative of the lender.

Kilmartin pointed out that the legislation is similar to ordinances already passed within the state, including the cities of Providence, Cranston, Warwick and, most recently, Warren.

The attorney general noted that of those homeowners who had completed the conciliation conference process in Providence, Cranston and Warwick as of the end of November, nearly three-quarters were able to reach an agreement with their lenders to avoid foreclosure.

"As I said many times when the national mortgage foreclosure settlement was announced, the breadth and complexity of issues posed by the national mortgage crisis are staggering, and it will take a great deal of effort -- and commitment -- on behalf of our elected leaders, our community partners, the mortgage service providers and homeowners, to right the housing crisis," Kilmartin said.

"This mortgage foreclosure conciliation legislation is one more piece to the puzzle."

The attorney general said the legislation, which exempts local lenders that service their mortgages and offer homeowners a forbearance relief program consistent with the requirements applicable to Federal Housing Administration-insured mortgages, would establish a "uniform process" throughout the state.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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