Foreclosure Battle: DeLauro Pitches Reform

The congresswoman wants to enact new national guidelines for lenders.

In an effort to curb the rate of foreclosed homes, new legislation proposed by Congresswoman Rosa DeLauro aims to make good communication between distressed homeowners and lenders the law.

Under the Democrat's proposal, if lenders don’t follow the proposed laws, then homeowners can sue and use the violations in defense of keeping their homes.

At the headquarters of , DeLauro criticized banks for being sloppy due to poor communication, lost paperwork and sometimes foreclosing on homes they don’t even have the title for.

“It’s chaos and it's trauma [and you lose] something you spent your entire life working for,” she said.

According to figures provided by DeLauro’s office, one in every 10 homeowners in the Milford/New Haven area is either in foreclosure or delinquent on their mortgages. DeLauro herself says she has heard from 450 constituents concerned about losing their homes and that her “office sees more home foreclosures than ever."

RealtyTrac, a commercial foreclosure listing service, reports that there were 22 homes in various stages of foreclosure in Branford in December 2011 – that's 1 in every 1,376 homes facing foreclosure.

Mayor Ben Blake said he believes the best way to improve things is to improve communication, which is why he said he supports the legislation.

“The end result is [the bill] is going to hopefully keep more people in their homes in the city of Milford, the state and the nation,” said Blake, a Democrat.

The Regulation of Mortgage Servicing Act has four key components that, if passed, would be used as national requirements for lenders dealing with foreclosures.

A ‘Case Manager’

Both DeLauro and Connecticut Attorney General George Jepsen told the crowd of Realtors, reporters and community leaders that homeowners often have to repeat their circumstances many times to employees who have no information about prior calls. DeLauro’s legislation would require that lenders create a “single point of contact for borrowers.”

Foreclosing or Negotiation: One or the Other

The second part of the bill would forbid the so-called “dual track process” that allows lenders to continue the process of foreclosing while at the same time negotiating with the homeowner on a modified loan. The purpose of this is to encourage lenders to discuss all possible options that could keep the person in the home.

A Third-Party Review

The final part of the bill would require a third-party review of modified loans and alternatives to foreclosures before beginning the foreclosure process. When asked who the third party would be, DeLauro said it was conceivable that another department of the company could be the third party, but she said that is not preferable. She defined third party as “an entity that is not a servicer” for the loan.

Relief on the Horizon?

Jepsen said that Connecticut and approximately 40 other states are close to finalizing a settlement with lenders that he said acted recklessly leading up to the burst of the housing bubble. The settlement, which he hopes to wrap up next week, will include 40 pages of new standards that lenders have to adhere to, in addition to money for refinancing, loan modifications and consulting with homeowners.

Related Topics: Foreclosures and delauroDo you support DeLauro's legislation for mortgage lending reform? Why or why not? 

sam January 31, 2012 at 02:34 AM
Just make sure you include the Republicans that were complicit in ruining our economy for their personal gain i.e. Phil Gramm. Otherwise you're just another "liberal hater" like Limbaugh or Hannity, who by the way are the biggest liberals on the planet.
susan Barnes January 31, 2012 at 03:18 AM
Term limitations on EVERY office at EVERY level EVERYWHERE.
sam January 31, 2012 at 03:24 AM
Couldn't agree more!!!
Dr. Alfred C. Whitehead January 31, 2012 at 11:58 AM
@ Sam...It is amusing to me and other readers I am sure to read silly comments such as yours. First, I never identified myself as a Republican. In fact, I am an independent voter. I said "crooked politicans" not Democrats. I guess if the shoe fits... wear it! I never identified anyone by name for that matter. It was you who did. Phil Gramm... is that the best you could come up with? You accuse me of being a "liberal hater." I don't hate liberals...especially guys like you. Rather, I feel sorry for a person like yourself who is so paranoid and insecure that you need to throw out names and vitriolic rethoric to defend some cause that was never mentioned. You have the typical knee JERK reaction from someone who defends a point of view with bluster rather than facts. Sam... think before you speak. It's better to be thought a fool that to speak... and remove all doubt. By the way, I don't agree with everything that Limbaugh or Hannity have to say. They are entitled to their opinions and I respect that right without lowering myself to attacking them by calling them "haters." Who is the real "hater" Sam?
Lori Fogler Nicholson February 01, 2012 at 03:07 PM
Yes yes yes...term limits. Fresh blood, fresh ideas, less group think and better representation.


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