Thursday, October 23, 2008

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Attorney General Abbott Calls For Mortgage Deferment Legislation To Help Struggling Homeowners

AUSTIN – Texas Attorney General Greg Abbott today proposed a legislative initiative aimed at improving the state’s foreclosure process and helping Texas homeowners stay in their homes.

Attorney General Abbott recommended state legislators consider enacting the Texas Foreclosure Deferment Act. Under the proposed Act, a mortgage loan servicer would be required to provide a homeowner with a certified letter stating that the debtor has 45 days to cure a loan default before a notice of sale. Current state law only provides homeowners a 20-day window to cure a default.

“Stabilizing and strengthening the Texas housing market is important to our state’s continued economic growth and expansion,” Attorney General Abbott said. “Today’s proposal ensures that struggling homeowners have more time to cure mortgage loan defaults and save their homes.”

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If the attorney general’s proposal were approved, lenders also would be required to contact the borrower by telephone or in person – or prove they made a legitimate attempt to do so – before filing for foreclosure. Additionally, homeowners would have 30 days after the foreclosure date to vacate the property.

To help Texas homeowners understand the foreclosure process, the Office of the Attorney General (OAG) would be authorized to create a model “Notice of Foreclosure” form for mortgage companies to use. The form would include a plain language definition of mortgage foreclosure; a reminder that homeowners have 45 days to cure defaulted loans; all rights and options available to homeowners seeking to save their homes; a warning about foreclosure rescue scams; and a listing of resources available to homeowners.

The OAG is actively pursuing numerous efforts to protect Texas homeowners. Under the Deceptive Trade Practices Act, the OAG has prosecuted a variety of deceptive loan practices, including title-related scams, fraudulent refinancing ploys and other mortgage-related fraud.

In August, Attorney General Abbott secured a $2 million judgment against Southern Residential, LLC, a Texas-based foreclosure rescue outfit that targeted Texans who fell behind on their mortgage payments. The OAG also shut down Foreclosure Assistance Solutions, a Florida-based foreclosure rescue scheme engaged in similar illegal practices.

Attorney General Abbott currently chairs the Texas Residential Mortgage Fraud Task Force, a legislatively-created entity composed of key regulatory agencies as well as state and federal law enforcement authorities. The task force facilitates communication and cooperation among the authorities responsible for investigating and prosecuting mortgage fraud.

Attorney General Abbott also met with three of Texas’ largest residential mortgage lenders and servicing companies. At that meeting, the attorney general asked the state’s largest lenders to help at-risk borrowers by implementing five homeowner-friendly measures, including: increased efforts to convert adjustable rate mortgages to fixed-interest loans; submitting additional delinquent loans to mitigation before immediately forcing them into an antagonistic collections process; improving communication and outreach; waiving penalties and fees while companies work with troubled homeowners; and promptly addressing homeowner complaints filed with the OAG.

Texas homeowners who believe they have been targeted by a mortgage-related scam should contact the Office of the Attorney General at (800) 252-8011 or file a complaint online at www.texasattorneygeneral.gov.