SENATE BILL: Homeowners Protection Act (Law'd)

[Senator North Carolina Yankee]

Homeowners Protection Act


From 1 May 2012, a 90-day moratorium on residential home foreclosures will come into effect.

After that 90-day period the following provisions are to be enacted.

1.   A bank cannot enforce a foreclosure unless the mortgagee can be provided with full documentation related to their mortgage conditions, including original signed documents. If the bank cannot provide full paperwork, the mortgagee must be permitted a further 90 days to renegotiate terms. If no original paperwork can be provided, or the bank no longer directly owns the mortgage, the foreclosure cannot continue.

2.   Any contravention of provision (1) will be met with a fine of $300,000 per episode and potential criminal prosecution.

3.   Any mortgagee may petition the federal government to issue a ‘foreclosure hold notice’ this document is to protect homeowners facing foreclosure due to financial circumstances beyond their control, such as medical expenses or disability.

4.   An application will be made to the county clerk’s office, the severity of the circumstances and the length of the hold is up to the determination of the clerk’s office. However, if granted a minimum hold period will be 30 days, with a maximum of 6 months.

5.   In the event that an agreement to sell the foreclosed home has been reached, the bank will give a minimum of 30 days notice to the mortgagee, and in the event that the house is sold for more than the mortgage is worth, the bank is only entitled to the total mortgage amount. Any additional monies generated by the sale are to be directed to the former homeowner.

Sponsor: Scott

[Senator North Carolina Yankee]

This is also an administration idea, I want Polnut to respond to this one too.

[Governor Scott]

I am advocating for the President's bill because I believe it will hold banks accountable and promote a cooperation-based relationship between the banks and its clients.

[Senator North Carolina Yankee]

We gonna have one hell of fun month here aren't we?


Only an affirmative answer will be acceptable here!

[Governor Scott]

Well, the bill's pretty self-explanatory.

[TJ in Wisco]

I am concerned that this would make it impossible for a foreclosure to occur if the bank sells the mortage. Sure we shouldn't want people snatching up 'toxic' assets, but I think this bill might go too far.

[Senator North Carolina Yankee]

I think it is a very basic requirement. If the banks were so near sighted and tunnell visioned that they allowed this paper work issue to happen, they must begin to fix and track down this stuff. They are the ones that started it and we have people who have paid off their mortgages in full get forclosed on and evicted in this mess. It is patently absurd and going forward, I think the requirement should be in place fore sure to prevent this from happening in the future.

Now as for the current situation, this may be abrupt and perhaps and more steady transistion is in order. Regardless of that, it is where we need to go. Had the amount of media penetration that this issue has received in the last year and a half been as forcefull in 2009, it would have been included in my Financial Regulatory Reform Act. I tried to deal with as many of the concerns as possible that I had read about at the time.

[Senator North Carolina Yankee]

It will also add that much more concern for what they doing rather than the focus being entirely on the next quarterly profits and pushing as much through, as fast as possible.

[Senator Sbane]

Homeowners Protection Act


From 1 May 2012, a 90-day moratorium on residential home foreclosures will come into effect.

After that 90-day period the following provisions are to be enacted.

1.   A bank cannot enforce a foreclosure unless the mortgagee can be provided with full documentation related to their mortgage conditions, including original signed documents. If the bank cannot provide full paperwork, the mortgagee must be permitted a further 90 days to renegotiate terms. If no original paperwork can be provided, or the bank no longer directly owns the mortgage, the foreclosure cannot continue.

2.   Any contravention of provision (1) will be met with a fine of $300,000 per episode and potential criminal prosecution.

3.   Any mortgagee may petition the federal government to issue a ‘foreclosure hold notice’ this document is to protect homeowners facing foreclosure due to financial circumstances beyond their control, such as medical expenses or disability.

4.   An application will be made to the county clerk’s office, the severity of the circumstances and the length of the hold is up to the determination of the clerk’s office. However, if granted a minimum hold period will be 30 days, with a maximum of 6 months.

5.   In the event that an agreement to sell the foreclosed home has been reached, the bank will give a minimum of 30 days notice to the mortgagee, and in the event that the house is sold for more than the mortgage is worth, the bank is only entitled to the total mortgage amount. Any additional monies generated by the sale are to be directed to the former homeowner.

I agree with TJ and offer this amendment. The way it is written, it would make it impossible for banks to sell properties before the foreclosure has ended. And anyways banks chop up mortgages between themselves and this would seem to end that.

[Governor Scott]

I will decide if I should consider this amendment friendly at the discretion of the President.

[Secretary Polnut]

I believe the first point of this Bill is to protect homeowners from situations, however, the Bill is also designed to ensure that Banks have their paperwork in order.

The only long-standing element of this Bill is to ensure banks comply with their administrative responsibilities.

Note that the spikes in home foreclosures are forcing housing values through the floor and also devaluing a primary tax base. We accept that foreclosures will happen, of course, but we need to stem the bleeding and pull back to take stock.

I'm needing to be convinced of the point of allowing banks to continue to foreclose when they no longer have ownership of that mortgage. At present I would not support the amendment.

[Governor Scott]

The amendment is unfriendly.

[Senator Sbane]

I believe the first point of this Bill is to protect homeowners from situations, however, the Bill is also designed to ensure that Banks have their paperwork in order.

The only long-standing element of this Bill is to ensure banks comply with their administrative responsibilities.

Note that the spikes in home foreclosures are forcing housing values through the floor and also devaluing a primary tax base. We accept that foreclosures will happen, of course, but we need to stem the bleeding and pull back to take stock.

I'm needing to be convinced of the point of allowing banks to continue to foreclose when they no longer have ownership of that mortgage. At present I would not support the amendment.

The new owners would be able to foreclose on them if they have their paperwork in order? Otherwise I agree with trying to slow down the rate of foreclosures.

[Senator North Carolina Yankee]

Just to be clear, does the honerable Senator from the Pacific still want to pursue the amendment?




The problem is that we can't end or significantly disrupt the process of foreclosures for an extended period of time. Otherwise the banks will start jacking up interest rates and will stop lending to all but those with the best credit and substantial incomes.

We all feal for what is happening to those who experienced this, my family experienced this a while back. The paperwork issue should be resolved and no one should loose their home while that isn't the case. But beyond that their needs to be consequences for delinquency. These people like the OWS, SEIU that call for people to remain living in homes they been evicted from and for a complete end of foreclosures are advocating for populist surreality that will do far more harm to the larger segment of society, especially the poor, in the long run. Moral hazard doesn't just apply to financial institutions, but to consumers as well.

[Secretary Polnut]

I believe the first point of this Bill is to protect homeowners from situations, however, the Bill is also designed to ensure that Banks have their paperwork in order.

The only long-standing element of this Bill is to ensure banks comply with their administrative responsibilities.

Note that the spikes in home foreclosures are forcing housing values through the floor and also devaluing a primary tax base. We accept that foreclosures will happen, of course, but we need to stem the bleeding and pull back to take stock.

I'm needing to be convinced of the point of allowing banks to continue to foreclose when they no longer have ownership of that mortgage. At present I would not support the amendment.

The new owners would be able to foreclose on them if they have their paperwork in order? Otherwise I agree with trying to slow down the rate of foreclosures.

The point is the if banks do not have their paperwork in order, then they either have to halt proceedings until they do, and if they don't possess the paperwork they cannot.

As I said earlier, this is the only element of this Bill that will be in place beyond the moratorium/adjustment periods.

If the paperwork is in order and the mortgagee does not qualify for the hold notice.

The consequences for delinquency beyond that period most certainly exist. And as long as the mortgage holder (bank etc etc) has fulfilled their administrative requirements, then the foreclosure can go ahead.

My goal for this, is to slow down the rates of foreclosures, to stop the ones that are going ahead illegally, and to put in place an orderly process to ensure banks are doing what they're supposed to do and make sure people who might be under significant financial pressure beyond their control have some degree of flexibility... however, if someone is delinquent in their payments and the all proper paper work can be found... then this does not stop foreclosures after the initial 90-day moratorium.

[Senator Sbane]

Since foreclosure proceedings can be started by the party that owns the mortgage, I will retract my amendment. Banks should be able to prove they own the mortgage before they can foreclose on someone.

[Senator North Carolina Yankee]

So are we in line for a final vote when the 72 hours expires tomorrow?

[Senator Sbane]

I believe so Yankee.

[Senator North Carolina Yankee]

A final vote is now open on this bill, Senators please vote Aye, Nay, or Abstain.

[Governor Scott]

Aye.

[Senator Sbane]

Aye

[ilikeverin]

Wait, so, the amendment striking the clause having to do with the bank having to prove it owns the property didn't go through?

I vote Abstain, then.  I'm all in favor of regulating these things more, but I'm not sure completely destroying the liquidity market (is that a thing?  I don't know if I just said a thing that was a thing.) is the solution to the problem.

[Senator North Carolina Yankee]

Wait, so, the amendment striking the clause having to do with the bank having to prove it owns the property didn't go through?

I vote Abstain, then.  I'm all in favor of regulating these things more, but I'm not sure completely destroying the liquidity market (is that a thing?  I don't know if I just said a thing that was a thing.) is the solution to the problem.

The Senator retracted the amendment. Such can be seen in Sbane's first post on page two of this thread.

I don't beleive there is a "liquidity market", but there is such a think as liquidity of banks and this could very well be detrimental to that.

[Senator Clarence]

Aye

[Senator North Carolina Yankee]

Aye