Thursday, May 05, 2011

Legislators Still Pushing Law to Shorten Foreclosure Time

State legislators are continuing their push for legislation to change foreclosure laws in Tennessee which will shorten the time it takes to foreclose on homeowners - even though the Tennessee Bankers Association, which created the legislation, denies any such move to shorten that time.

I've written about this here and here, and have received a few emails from the TBA's attorneys claiming I'm demonizing them and lying to readers. They paint this legislation as merely a battle between banks and newspapers, a claim which just doesn't hold up.

Legislation titled HB 1920 and SB 1299 originally planned to change the law so that only one public notice of foreclosure be published instead of the current 3 times law established, and now they have amended it to require only 2 notices. The TBA also claims the costs of publishing such notices are too high - citing a cost of $2500, though newspaper publishers cite the average costs of about $250.

The fact is that the current law, TCA 35-5-104 A(2) defines the description required for public notice publication as : "Describe the land in brief terms, including the street address if available."

So it seems clear to me the attorneys working for banks have created a system where the longest possible descriptions are offered, which increases attorney fees and the cost of publication. That is not a homeowners decision nor is it a decision of newspapers.

Opposition to this legislation does come from newspaper publishers, true, but as noted in an email I received from Daily Times publisher Eric Barnes, many other groups oppose it as well. He writes:

"The Land Title Association, the Bar Association, the Press Association and a variety of consumer groups are opposed to the bill.

We are opposed to the bill for many reasons:

- At 1 newspaper notice, Tennessee would have the lowest standard for public disclosure in the country, putting us below West Virginia, which requires only 2 notices. Many states require 4 or more.

- Public notice is not just about notifying the homeowner; it’s about notifying:

- Neighbors whose property values are inextricably tied to the neighborhood,

- Family members who may be unaware of the financial problems of a parent or grandparent,

- Non-profits and other entities who may be able to help a homeowner avoid foreclosure,

- Municipalities, neighborhood associations and CDC’s who are on the lookout for the blight and crime that is too often a result of foreclosures.

- The bankers claim no one reads the notices; in fact, they do. We get calls and emails every day from people about our notices, whether they’ve seen them in print, online, or in an email. However, a stripped down notice with a just a book and page number would render those notices almost meaningless.

- While there are a handful of examples of newspapers charging onerous amounts for notices, in truth the statewide average is less than $250/notice. And that price is falling."

Also opposed -

Former legislator Susan Lynn, who writes:

This is not a conservative or liberal issue, but one of fairness. A property owner deserves to get the best price for their home in a forced sale. The public deserves to know that a government-proscribed procedure, foreclosure, is creating an opportunity. In return, the bank is deemed to have acted in good faith when foreclosing on a home."

Nancy Releford of the Home Equity Mortgage LLC

"Tennessee is going against national trends to protect the consumer and granting special favors to banks ..."

Mortgage attorney Webb Brewer, who writes:

"Reduction in the publication of notices of foreclosure would also reduce the number of people who might come to a foreclosure sale to bid on the property if a homeowner is not able to avert the sale. Since Tennessee law allows a mortgage lender to collect the difference between the amount owed on a loan and the foreclosure sale price minus expenses, it is in the consumer’s best interest for the sale to bring the highest possible price. Currently, in most cases mortgage companies purchase the properties they foreclose on for far less than the real value of the property, leaving a large deficiency. The bills under contemplation would make this situation worse."

Despite these concerns, the legislation moves forward. The TBA claims "shorter notices help everyone" and:

anks do not want to be in the real estate business."

And yet, they are indeed in such a business.

The only way to slow it down or have it further debated - you have to get involved and contact your representatives and senators. The directory for Senators is here, for Representatives here, legislators is here and I urge you to contact them today.

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