Bill Watch Action – Homeowners’ Bill of Rights

The Racial Equity Bill Watch is coming together, with more on its list every day. Organizers, lobbyists, and legislators have been busy working to build racial justice in Minnesota. The Bill Watch is, of course, a tool for action — it offers community leaders a chance to emphasize what is important for greater racial equity, and it gives legislators a picture of what matters to all of us seeking a more just Minnesota. Like the 2013 Racial Equity Agenda, it will connect multiple strategies together with a common thread of racial and economic equity.

Here is one for the Bill Watch: the Homeowners’ Bill of Rights, which just passed out of the House Housing Finance and Policy Committee yesterday. As reported by Workday Minnesota, the Homeowners’ Bill of Rights will protect homeowners at risk of foreclosure by:

• Implementing a foreclosure mediation program. There is growing recognition of the effectiveness of foreclosure mediation programs in preventing unnecessary foreclosures by bringing lenders and homeowners together for a face-to-face conversation about the homeowner’s situation and available options. There are now jurisdictions in 25 states that use foreclosure mediation. Around the country, more than 70 percent of mediated cases reach a settlement – usually one that means a family stays in their home. Those for whom paying a mortgage is not a sustainable option also benefit by negotiating a “graceful exit” in how and when they move out.

• Banning dual tracking. The law would prohibit mortgage companies from pursuing foreclosure while a homeowner is seeking a loan modification, a process known as “dual tracking,” that has resulted in numerous foreclosures of homeowners who were actively working to stay in their homes. Modification departments at banks like Wells Fargo and Bank of America, for instance, often instructed homeowners to stop making payments in order for them to get assigned to the loan modification program. However, when the homeowners followed these directions, the banks often foreclosed on them anyway.

• Requiring a single point of contact. The law would require that mortgage companies assign struggling homeowners a “single point of contact – an individual who knows about the homeowner’s loan, has access to decision makers, and will handle the flow of documentation between the homeowner and the mortgage company. The law would also require mortgage companies to explicitly approve or deny a modification, verify foreclosure documents, and provide such documentation to homeowners upon request.

• Allowing homeowners to sue their bank following a dual tracking loss. Homeowners would have the right to seek damages, including attorney’s fees, if they incur a loss as a result of dual tracking. This private right of action has been extremely valuable for homeowners in other states. A judge in Louisiana, for instance, awarded a homeowner $3.1 million in damages because of “reprehensible actions” from Wells Fargo, which serviced the loan.

Next stop for this bill is the House Civil Law Committee.

The Racial Equity Bill Watch will be coming out soon and we are looking to our partners for building racial justice to share priorities for the Bill Watch. What bills are you paying attention to for advancing racial justice in Minnesota? Let me know.

–Vina Kay, kay@oaproject.org

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