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Center for Responsible Lending President Mike Calhoun on the different state laws affecting how foreclosures and short sales are handled.
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-- mortgage settlement of the nation's five biggest banks reached -- most of the nation's attorneys general.
Well the California legislature is voting on a bill today to put most of this in place it would make it tougher for banks to foreclose on homes.
It would be be first in the nation.
But it doesn't stop there 24 other states are looking into changing our -- -- foreclosure -- some say this is a huge step forward but.
Mean I don't think it's good at all in fact I say foreclosures and short -- actually the solution to this problem here disagreeing.
My house.
President the Center for Responsible Lending Mike thanks for coming on.
I appreciate it.
The first strikes me that's troublesome about this is that -- fifty states come up with fifty different sets of rules.
It's gonna make it even harder for banks to comply with any of them -- to thank.
Historic.
Leave the banks have not had a problem of doing that this is an area foreclosure.
That has always been left to the states we have to.
Basically different types of foreclosure processes so called judicial where the bank has to go to court and the places like California so called nonjudicial.
Where they don't have to file any papers in court.
To process through foreclosure and take your house what do you think is the goal of this of this legislation what do you think is the benefit ebit before I sit here and sort of tear -- apart.
Well I think the big surprise for people with everyone heard about this attorney general settlement and these new standards that servicers.
Are supposed to follow.
But the big surprise is if you have a loan.
And the servicers don't follow those procedures and take your home.
You can't do any thing about it.
You can go complained to a monitor who looks to see if -- has systemic.
Problems but the monitor who is we think it's a very strong monitor is not they -- to look at individual cases.
Sure we can talk about taking people's home you know in the foreclosure process eat you know we -- we looked on the records last month.
Our in April actually the average time that somebody had been delinquent when their house went into foreclosure with 22 months so almost as we -- and I said.
That's an outrage and the blame for that is right at the big banks feet.
That -- -- that -- -- -- got to tell people not paying their mortgage.
And the blame goes dead is what is slowing them down is some states it said.
Before you foreclose.
You need to come in and show that you own the loan that you had your paperwork to foreclose and that you know how much the borrowers paid and whether or not they're behind.
One of the things that this bill does in California that I think helps you streams on foreclosures.
It moves them through faster and -- AG settlement does the same thing it sets deadlines and says.
Let's look at your loan early on if you fall behind.
But they're strict timetables and there look and see -- of modification will help the person if they qualify Ford.
If they can that's good for everybody I think whole house -- I -- -- people like they can't move to foreclosure.
But follow the rules if you're gonna take somebody's house that's all disability I -- -- -- -- does behoove everyone to go for modification but some of the rules like -- what one in this bill is that you can't foreclose if they're talking to someone about a modification.
See you could just keep the conversation going on this could go on forever I mean if you -- All that is not now that's not out.
That's not the -- the borrower that that the borrower has to comply with all the reasonable deadlines and if the borrower does not do that legally.
The servicer to move ahead with foreclosure and that stands up in court and so.
If it doesn't it there all kinds of protections in here.
For borrower to have any claim they have to show it was some material violation that's the reason they're in foreclosure.
And also it gives a so called.
Right to cure to the banks it says even if you messed up and did this all wrong is long as you fix it.
Even after the borrower complaints and goes to the trouble hiring an attorney going to court.
-- Almost all of that sounds like dragging on the process even longer and longer it it always makes me wonder what about the rights of the guy who lives right next door.
And has been paying his mortgage and of the same time he's living next to someone.
Who isn't paying their mortgage and is driving down the prices of homes in the whole neighborhood what about his -- We agree completely the people who -- hurt the most by this.
Foreclosure process -- are often the neighbors who have a bunch of foreclosures in their house.
And -- if the organization on -- is both a significant mortgage lender as -- consumer advocate and we hold all of the legal risk.
All mortgages across 48 states and so we understand the problems were -- Were -- you understand the model by mortgage don't you think that.
I'm faster solution for everyone involved -- short sales vs foreclosure meaning keeps the price the house higher clears the market at a quicker level one you focus on.
Trying to clear the rules for short sailing as opposed to trying to prolong for closure.
We agree and it's one of the things actually that the attorney general.
Settlement does it includes additional incentives for short sales -- somebody cannot afford their mortgage.
They ought to be moved.
On to another.
It's a more stable housing situation they don't have a right to stay in the house.
Without pay -- on the mortgage.
We totally support that and this bill.
Carrey set out and says were in this mess because the servicers that we're not.
Set up to handle this my.
I think -- and I -- a lot distraught Gaza's that they couldn't afford and then stayed in -- and continued.
-- to live there even though they didn't -- or not there's not blaming this probably go around to everyone and I appreciate you coming on back -- Calhoun.
Tonight help -- trying get to the bottom of one of the solutions.
I appreciate the chance this bill will make things better for everyone thank -- we'll say 81 -- --
