Brown, chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, called for passage of his Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011, which contains 16 provisions, mostly aimed at loan servicing companies, that would help protect the interest of both homeowners and mortgage holders in the foreclosure process.
Butler and Warren counties have been particularly hard hit since the foreclosure crisis began. New U.S. Census data shows the number of vacant properties being held off the market more than doubled since the 2000 Census, accounting for about 4,400 properties in the two-county region and more than 175,000 properties statewide.
The crisis has hit Middletown and Hamilton particularly hard, with almost 30 percent of their housing stock perceived to be vacant due to foreclosure.
Brown said the foreclosure crisis in the region, the state and the nation has been made worse by the abusive and sometimes illegal tactics used by lenders and the servicing companies that collect payments for them.
“Predatory practices are occurring right now in the (loan) servicing industry that are similar to the predatory practices that led a few years ago to the sub-prime crisis,” Brown said.
“Big banks tell us that these mistakes are isolated, they say they’re harmless. But the problems are not new. They’re well-documented. They’re part of a long-standing, ugly, ugly pattern of homeowner abuse.”
The banks have been caught twice, Brown said. Once when the housing market imploded and again last year when several big banks admitted to illegal practices in filing foreclosure documents.
The banks promised to end the practice called robosigning, in which employees sign thousands of documents without doing the background work to verify their accuracy. But Brown pointed to recent reports by news agencies that some banks are still continuing the practice.
In Butler County, sheriff’s office auctioneer Jim Allen said he hasn’t seen any evidence of robosigning increasing foreclosures locally. The housing issue is leveling off in comparison to last year, mostly due to the fact that more people are having trouble paying their property taxes rather than the mortgage, Allen said.
“I haven’t seen anything about (robosigning),” Allen said. “I don’t think we are seeing much of a pick-up.”
In July, the county processed 189 foreclosures compared to 211 during the same period in 2010. Starting in August, Allen said he began holding two foreclosure auctions, one for tax foreclosures and one for mortgages. About 20 properties are sold at auction a week due to tax issues versus 40 per week due to mortgage issues, Allen said.
While not every home can be saved, Brown said the bad practices by lenders that make matters worse have got to stop.
Community officials are doing all they can and making some progress on the foreclosure crisis, Brown said, “but they need federal laws to back them up.”
Lenders often claim that homeowners didn’t meet their obligations, Brown said, and they lack personal responsibility.
“Well, we need responsibility from the banking industry,” he said. “We need more personal responsibility among these servicers — the same kinds of standards that they’ve tried to impose on homeowners.
“Money and profits, simply put, should not trump the law.”
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