Michael Sanchez
Last week, the foreclosure-listing firm RealtyTrac Inc. announced that mortgage default notices in New Mexico have hit a 15-month high. The firm reported that the number of homeowners who received initial default notices, the first step in foreclosure, jumped 29 percent from July to August, and cases were up 61 percent from the same time a year ago.
Although the announcement is disturbing, unfortunately it is not surprising.
New Mexico lost a chance to pull out of the mortgage foreclosure nosedive when Senate Bill 406, the Mortgage Fair Foreclosure Act, was tabled in the House Judiciary Committee during the 2011 regular session on an 8-4 vote.
The committee’s action effectively killed the bill and killed people’s chances of saving their homes from bank repossession. The bill would have given homeowners a fair shot at keeping their homes. It would have given homeowners a chance to negotiate with the bank and perhaps make some progress in saving their property. It would have helped reduce the staggering statistics reported last week.
The Mortgage Fair Foreclosure Act was designed to facilitate negotiations between homeowners and mortgage holders and, if possible, to avoid foreclosure. The act would have given homeowners reasonable notice from the mortgage holder 30 days prior to the loss of their home, and given them a meaningful opportunity to explore ways to stop foreclosure.
That process would have required the bank to work with eligible homeowners to complete a loan modification process before filing for foreclosure. Where appropriate, it could have included modifying the loan, adding missed payments to the loan balance, or converting adjustable rate mortgages to a fixed rate.
The act passed the Senate on a 28-10 vote with bipartisan support. But the House was a different story. The banking industry fought the bill’s passage and eventually killed any chances for its approval by a House committee.
Apparently, the banking industry was more influential than New Mexico homeowners. We are now seeing the results of that action, with swelling foreclosure rates and families forced out of the homes they have worked and saved for years to own.
During the upcoming session that begins in January, I will continue to work with New Mexico Attorney General Gary King, who proposed the original bill. It is imperative that the mortgage servicing process is fair to everyone.
Too many New Mexicans are struggling to save their homes and end the tragic sight of foreclosure sale signs on their front doorsteps. We owe it to them to continue the battle.
Sanchez, a Democrat, represents District 29 in the New Mexico Senate and is the majority leader.