Task force targets remedies for foreclosures

Ohio was third in the nation for foreclosure rates the first six months of this year.

COLUMBUS (AP) — Smart lending and borrowing and early intervention are the keys to stemming the state’s soaring foreclosure rate, a government task force concludes in a draft report.

So-called subprime lenders need to do a better job identifying credit risks and borrowers should be aware of the pitfalls of mortgage payments, especially those with adjustable rates, the Ohio Foreclosure Task Force says in its draft report.

The task force, which was appointed by Gov. Ted Strickland, is expected to formally adopt the report’s recommendations next month.

The panel includes government and nonprofit officials, as well as lenders. It was created to prevent the rising tide of foreclosures in Ohio, which was third in the nation, behind California and Florida, with 44,594 foreclosed homes, during the first six months of this year.

Ohio’s foreclosure rate has been higher than the national average for every quarter since the end of 1998.

The task force is expected to call for lenders to be more open to converting adjustable interest rates to fixed rates or to give borrowers 90 days’ notice before increasing an interest rate.

Buyers share responsibility

Buyers also must act quickly when their payments begin to overwhelm them, said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio. The state should kick in $2 million to a $10 million counseling program to help people hang on to their homes, the task force said.

“It’s key that homeowners should take action, work with a counselor early,” said Faith, a task force member. “People don’t do anything until it’s too late.”

The foreclosure rate is fueled by subprime loans, which make up 60 percent of foreclosures but only 20 percent of the mortgage market, Faith said.

“We have to get the mortgage lenders to stop making bad loans that folks can’t repay and work with the people that have these loans, modify these loans,” Faith said.

The task force also looked at how cities cope with abandoned housing but decided against a statewide recommendation, Faith said. One city, Youngstown, has a demolition strategy, but that doesn’t suit every city. Youngstown is losing population, but Columbus, for example, still is growing.

“The mayor of Columbus [Michael Coleman] has a very different strategy than Youngstown: Go in and rehab, go in and do it street by street, neighborhood by neighborhood,” Faith said. “The trick is making neighborhoods attractive for the appropriate families to move back in.”

New legislation

Lawmakers last year placed new restrictions on lending, including the ability for a borrower to sue a lender who isn’t covered by federal regulations by using the Ohio consumer protection law. The legislation was welcome but too late for many home buyers, Strickland said.

“Ohio was a hugely unregulated state when it comes to protections for people. That was corrected largely, but only after the fact. The horse was already out of the barn,” Strickland said.

“One reason Ohio was hurting so much as compared to other states is because we were basically a wild west when it came to lack of regulatory protections. I think that’s largely been corrected, only after a lot of people had found themselves in situations where they had assumed responsibilities they just couldn’t meet,” he said.

The report is due to Strickland by Sept. 10.