Story Created:
Oct 1, 2008 at 3:50 PM EST
Story Updated:
Oct 1, 2008 at 3:50 PM EST
INDIANAPOLIS (AP) — Democratic governor's candidate Jill Long Thompson announced proposals Wednesday designed to help families avoid home foreclosures, including required mediations between borrowers and lenders.
She accused Republican Gov. Mitch Daniels of doing nothing to help people avert foreclosures, but he has signed legislation over the past two years that at least partially addresses the issue.
Long Thompson noted that the mortgage crisis is one of the leading factors behind the nation's economic woes, and Indiana continues to be one of the top states in the percentage of homes in foreclosure. It ranks sixth highest according to the latest figures from the Mortgage Bankers Association.
"I think we're in for some very tough times and we need to be doing everything we can at the state level," Long Thompson said. "The federal government needs to take action, but we here in Indiana need to have policies that are going to work for our families."
Under her proposal, homeowners scheduled for foreclosure would be required to attend a court-ordered meeting with the lender and a mediator in hopes of modifying the mortgage and avoiding foreclosure. The mediators might be brokers who agree to work for free in trying to negotiate terms in the interest of the homeowner and the lender.
She said Philadelphia has such a program and it has greatly averted foreclosures there.
Long Thompson said she also would pursue legislation that would extend the period of time between the filing of a foreclosure complaint and the time the lender can request a court-ordered sale from 90 days to 120 days. That would give the borrower more time to refinance the home through another lender or renegotiate the existing mortgage.
She also said she would seek tougher laws on fraudulent or unscrupulous lending practices.
Long Thompson said some borrowers face foreclosure through no fault of their own, such as a family's breadwinner getting sick and being unable to work.
Daniels campaign spokesman Cam Savage said the governor has been proactive in trying to reduce foreclosures.
He signed a bill earlier this year that puts mortgage-only loan businesses that offer first-lien mortgages under the regulation of the state Department of Financial Institutions. Banks and second-mortgage lenders already fall under the agency's oversight.
The new law also mandated a database to keep the electronic records of all professionals involved in a real estate action. Daniels signed a bill in 2007 that created the Indiana Foreclosure Prevention Network, which is made up of more than 40 banks, community organizations and housing agencies.
It is an education and outreach organization and network of advisers for homeowners who need assistance. Homeowners can call a help line at 1-877-GET-HOPE or visit the Web site at www.877Gethope.org.
Earlier this year, Ivy Tech Community College teamed up with the foreclosure prevention network and held public workshops for struggling homeowners around Indiana. It gave them a chance to meet face-to-face with housing counselors or their lender. The topics included dealing with mortgage fraud, debt management and home improvement.
For the second quarter of 2008 ending June 30, 2.75 percent of homes nationally were in the process of foreclosure, according to the Mortgage Bankers Association. Indiana's rate was 3.59 percent, sixth highest nationally. Florida's rate of 6 percent was highest.
