Foreclosure Rescue Plan

State Representatives Anna Tovar, (D) Tolleson, and Daniel Patterson,(D) Tucson, discuss the House Democrats’ foreclosure rescue plan.

Transcript:

Ted Simons: Good evening, and welcome to "Horizon," I'm Ted Simons. Police organizations are split on who they support in Arizona's U.S. Senate primary race between Senator John McCain and challenger J.D. Hayworth. Over the weekend McCain picked up the endorsement of the Arizona Fraternal Order of Police. Today Hayworth was endorsed by the Phoenix Law Enforcement Association, but two past presidents of the association and six past board members have endorsed McCain instead. Another state lawmaker leaves office to run for Congress. Senator Jonathan Paton of Tucson quit his seat today to take on Congresswoman Gabrielle Giffords in Arizona's Eighth Congressional District. Arizona House Democrats announce a foreclosure rescue plan today. Among the provisions of the legislation, a 60-day relief period to those in danger of losing their home. Protection against foreclosure scams. Encouragement for the restructuring of loans facing foreclosure. And it would create a mandatory mediation program targeting troubled mortgages. Here to discuss the measure are Representatives Anna Tovar and Daniel Patterson. Thank you both for joining us tonight on "Horizon."

Anna Tovar: Thank you.

Ted Simons: Why these ideas? Why now?

Anna Tovar: I specifically think right now is the perfect time for Arizona to have solutions for the foreclosure crisis problems that we see right now. As House Democrats we brought forward this foreclosure act that actually brings solutions to people who are facing foreclosures.

Ted Simons: Let's talk about some of these solutions. One of the bills talks about 60 days as a way to negotiate a revised payment plan between lenders and homeowners. Talk about that.

Daniel Patterson: That's right. The idea is to give people a time-out. They would have to have a signed notarized affidavit to give them a time-out to prevent people from being forced out. A lot of times people get into a crisis situation. This gives them a little more time to try to come up with a more fair arrangement with lenders, to protect middle-class families here in Arizona and also to protect neighborhoods. As people are being thrown out and there are more foreclosures, this is still a growing issue in Arizona. It's also dragging down neighborhoods. The idea is to try to give people more time to work out a more fair agreement.

Ted Simons: Who would act as trustee in something like this?

Daniel Patterson: The agreement basically would be between the lender and the homeowner at the same time. But we're also looking at ways to try to come up with good incentives for lenders and homeowners to sit down and work out more fair terms. That's the whole issue here, is fairness, trying to get our state's economy back on track. As the foreclosure problem grows it continues to drag down the real estate market, which harms the Arizona economy. We're trying to find some common sense solutions to that.

Ted Simons: I asked about that because there's also an idea of delaying foreclosures up to a year if the lender doesn't negotiate in good faith. Again, who decides that?

Anna Tovar: Specifically, in my bill, the mandatory mediation act, it would force the lender and homeowner to sit down and come to some arrangement under mediation process. Because currently what I'm hearing from homeowners in my district, specifically in the West Valley, is that there's no communication between the lender and the borrower. They feel that they are left out. They feel they are not communicating. So with my bill it would mandate that lender to sit down with the homeowner to come to some type of agreement.

Ted Simons: The idea of homeowners getting to stay in their homes as renters, again, how does this play out in the real world? Give us an example of how this would work.

Anna Tovar: The right to rent act would allow the homeowner to become a renter after their home is foreclosed on. Time and time again you see neighborhoods becoming vacant. You have kids uprooting and leaving school. As a former teacher, this would allow the homeowner to stay in their home. The children are accustomed to going to a specific school. This would keep the community intact.

Ted Simons: How long would they be able to do that? You've got lenders and other homeowners in the area saying how long is this going to last? All of a sudden we've got renters instead of owner occupieds.

Daniel Patterson: A lot of people feel like Arizona is just on the wrong track economically, and this is part of trying to get us back on the right track. We've launched today what we think is a bold and needed package, we would hope to work in a bipartisan fashion at the legislature to get done as these bills move through the process, so people have ideas to strengthen them or make them very clear. We are very open to working to make sure these bills do the job. The whole intent is to give some stabilization to middle-class families dealing with a horrible economic crisis, and to try to stabilize our neighborhoods and help to bring back the real estate market. We think this package will help to do that.

Ted Simons: The idea of a property that has to be maintained during a foreclosure process, again, how does that work in the real world?

Daniel Patterson: That would be required under one of my bills that is out there, that if banks are going to foreclose and push people out -- in some cases they may need to do that. We would never be able to hold off all foreclosures. There will be some situations that won't be solvable. I think all of us know that. All over Arizona we've seen and in parts of Tucson, and in Phoenix, people get squeezed out; these homes end up looted, often everything of value is stolen, including pipes and wiring. They become crime problems and then often the banks are headquartered out of state in New York or somewhere else, they tend to not be as concerned about the neighborhood quality of life and the people stuck there. This would require banks and lenders to take some responsibility to maintain properties and protect neighborhoods and prevent neighborhood blight. It's a big issue at the Capitol.

Ted Simons: You also have many municipalities with code enforcement. When they see a house going through some trouble, the idea is the City drives by and says, we've got to take care of what's going on here. How does this either add to the burden of cities, or Who enforces this kind of an idea? It makes sense and I'm wondering how municipalities can handle this.

Anna Tovar: I think right now cities are cutting people left and right. So I think the burden should not be placed on the cities. I think it should be placed on the lender and the lender taking responsibility for that property and making sure it's maintained.

Ted Simons: The idea of mortgage fraud and scams, I'm going to buy your house, you're going to give me the title and I'm going rent it out to you, and all of a sudden I decided to raise the rent. Talk to us about how big a problem this is and how the bills are trying to address this.

Anna Tovar: Specifically in my district this is a great problem, where people feel that they are in desperate need of a solution. When they hear these advertisements on the newspaper or radio or television, specifically in Spanish television, I know a lot of constituents who are Spanish-speaking only are targeted by these scams. What the law would do with these bills, it would prohibit those scams from taking place, protecting the homeowner.

Ted Simons: Again, the idea that you can call me and for a price I will tell you how to modify your loan, when all they have to do is get this stuff for free, can't they? That's the whole idea.

Daniel Patterson: People need to know that those options are out there but there are a lot of people that prey on folks that are economically at risk. When you're facing losing your home that's very stressful for you and your family. People are desperate for any kind of help. Slick advertising, ways to pull people into these scams are something that I think the legislature should address. We've been hearing from cities and towns and counties that they would like some stronger state law on this. The intent is to help local enforcement by making it clear that the state wants these properties to be maintained. They want neighborhoods and families to be treated more fairly.

Ted Simons: And one more idea, sounds like you're calling for either licensed or nonprofit to act as a consultant. So basically you're talking about licensing folks who are foreclosure consultants.

Daniel Patterson: That's one of the ideas. Again, the idea is to cut down on unethical behavior. At least have some level of accreditation so people do know what's going on. We think that's going to help get some of the bad actors out of the scam side of this.

Ted Simons: Confident this will delay or prevent foreclosures, these ideas?

Anna Tovar: Oh, definitely. It's not the silver bullet, but it is a solution right now. Definitely Arizona's middle-class families are in need of a solution. House Democrats have brought the Foreclosure Rescue Act to provide solutions for middle-class families.

Ted Simons: All right, very good. Thank you so much for joining us.

Anna Tovar: Thank you.