AUSTIN — When Texas homeowners get behind on their mortgages, they face one of the quickest and least negotiable foreclosure processes in the nation. Now those who have lost their homes and others who are desperately trying to hang on to them are turning to the state Legislature for help.
Lawmakers have the power to extend the foreclosure process and create mandatory mediation, in which owners could sit down with their lenders and negotiate a loan modification before losing their home.
The homeowner protections are gaining support from Republicans and Democrats, as well as consumer groups. The community group ACORN is bringing several hundred supporters to the Capitol today.
More than 11,300 properties were posted for foreclosure auctions in Bexar County last year, a 28 percent increase from 2006. Nationally, foreclosure postings increased 92 percent in that same period, according to RealtyTrac, a national foreclosure tracking agency.
Sen. Craig Estes, R-Wichita Falls, wants to give homeowners x receiving a foreclosure notice 45 days — up from 20 days now — to resolve their mortgage default before losing their home.
The idea was proposed last fall by Texas Attorney General Greg Abbott, who said stabilizing the Texas housing market is important to the state’s economic group. “This bill is not a bailout for delinquent homeowners or excessive lenders. It is a timeout to allow two parties in a difficult economy to find a way to responsibly meet their obligations as lenders and borrowers,” Estes said.
His proposed Mortgage Foreclosure Deferment Act also would give homeowners at least 30 days to vacate a foreclosed property. And it would add protections for renters by requiring owners to notify them within seven days of a pending foreclosure. Sen. Leticia Van de Putte, D-San Antonio, the bill’s co-author, said the extra time would allow homeowners to work with nonprofit groups that help negotiate loan modifications.
“Many people really don’t know the myriad of resources available to them,” she said. “They’ve got a very short foreclosure window, so they don’t know where to find them.”
Sen. Rodney Ellis, D-Houston, is working on measures that would create a mandatory mediation process.
It would temporarily halt foreclosure proceedings as homeowners and lenders meet to negotiate a loan modification.
Texas hasn’t suffered as many foreclosures as states like Florida and California, partly because property values here didn’t balloon in the early part of the decade.
ACORN estimates that one in 35 Texas homeowners will face foreclosure by the end of 2010.
Candy Torres, who is attending the ACORN rally, said a required mediation with her lender might have allowed her to keep the two-bedroom Clear Lake home she bought in 2003. Torres, a 55-year-old unemployed computer engineer, said she had a standard mortgage at 5 percent interest, but fell behind on her $1,300 monthly payments.
Torres wrote letters to her lender, discussing the work and health hardships that contributed to her financial problems. But, she said, the lender would not modify her loan.
She used money from the sale of her childhood home in New Jersey for the down payment. “It wasn’t just my money, but it was the hard work of my parents,” she said.
John Heasley, an executive with the Texas Bankers Association, said it usually takes about four months after a missed mortgage payment for a lender to initiate foreclosure. “Lenders rarely act after the missing of one payment,” he said. “Most Texas banks, especially community banks, try to work with borrowers. They just don’t want to be in the real estate business.”
He said the association is concerned about some of the bills, and questioned whether there would be enough mediators available. Heasley also questioned whether the foreclosure crisis is serious enough in Texas to warrant change.
“Texas is an island in a national ocean of financial turmoil,” he said. “Our lenders are still very well capitalized and healthy.”
