On Wednesday we joined more than 60 faith and community leaders in the rotunda of the state capitol to call on state legislators to take action this year to help struggling New Mexican homeowners keep their homes. Amongst the speakers was Las Cruces native Rose Ann Vasquez, whose story epitomized the upside-down world of the housing crisis.
“Bank of America won’t take my mortgage payment. I have a job now and yet they refuse to re-instate my payments. I feel like a sitting duck,” said Rose Ann, who had fallen behind on her mortgage when she lost her job last year, but has since regained employment and is able to maker her payments once again. The problem: Bank of America will not work with her to reduce the amount in arrears and get her life back on track.
Rose Ann is just one of thousands of New Mexicans facing foreclosure. As her story reveals, so many of these families could lose their homes simply because their lenders refuse to negotiate in good faith with them to find a win-win solution.
Last year, the state Legislature had the chance to help New Mexico homeowners who are struggling to negotiate with their lenders. But the Legislature failed to act, and countless families needlessly lost their homes as a result. They have a chance to get it right this year with the introduction of several bills aimed to help prevent unnecessary foreclosures:
- Senate Bill 1, sponsored by Senator Michael Sanchez, D-Belen, strengthens due diligence on the part of banks to ensure that homeowners have had proper notice, and it stops the “dual track” practice of foreclosure proceedings.
- Senate Bill 75, sponsored by Senator Steve Fischmann, D-Las Cruces, requires mediation during the foreclosure proceedings that could provide homeowners the opportunity to have a third party with them in negotiations and leverage someone from banks with authority to modify a loan.
- Senate Bill 38, sponsored by Senator Gerald Ortiz y Pino, D-Albuquerque, would provide the state with $1 million in funding for financial and foreclosure counseling before people start a foreclosure process.
All of these are critical because together they address the obstacles and phases a homeowner will face if they find themselves unable to pay their mortgage.
An encouraging sign
In an encouraging sign, Governor Susana Martinez kept these on her list of messages she sent to the Senate this week. The governor understands that healing the housing market is essential for rebuilding the state’s economy.
It is important that the state take action on this issue and not rely on federal bank regulators to look out for the best interests of New Mexico borrowers. Federal regulators such as the Office of the Comptroller of Currency (OCC) consistently side with the interests of the nation’s big banks, even going so far as to call them their “clients.” Meanwhile, many community banks that play by the rules get the short end of the stick when their larger competitors are given such preferential treatment.
To put a meaningful dent in the crisis, state legislators must put an end to the so-called “dual track” process that allows banks to move forward with the foreclosure process even while homeowners are applying for a loan modification. They must also address the lack of counseling services for homeowners who need assistance in navigating the confusing world of negotiating with their bank. And they should assure that no homeowner ever has to face a situation like Rose Ann’s by requiring lenders and borrowers to meet for a face-to-face mediation session before any foreclosure is allowed to proceed.
Similar legislation passed in Hawaii has driven down foreclosures by 50 percent.
Federal action also needed
And while we cannot rely on friendly bank regulators at the federal level to solve the crisis, we do need action from Washington. Those of us gathered at the rotunda were heartened to see the president announce during his State of the Union speech that he would be launching a joint investigation into the abusive lending and packaging of risky mortgages that led to the housing crisis. We need President Obama to follow through on his pledge and conduct a thorough investigation that provides meaningful relief for homeowners commensurate to the scale of the banks’ misconduct.
The urgency of helping homeowners in New Mexico is growing. Senators from both Central and Southern New Mexico are rallying together, the Conference of Catholic Bishops is working hard to highlight this need, and the House should respond with energy and urgency as well. If we don’t get involved in working our hardest to keep families in their homes, it is unclear to us what we are willing to do to help fellow New Mexicans.
Nolan, executive director of NM Comunidades en Acción y de Fé (CAFé), and Martinez, co-director of Partnership for Community Action, are part of a growing number of New Mexicans pushing to hold the banks and government accountable for fixing the housing crisis. Learn more at OrganizeNM.org.