February 28, 2011

Keeping Rhode Island Families in Their Homes

This has been a hard winter for many Rhode Island families: heavy snow and freezing temperatures; the lingering effects of the recession in double digit unemployment and budget shortfalls; and perhaps most cruelly in these winter months, foreclosures which cost many families their homes and blight surrounding neighborhoods.

Nearly more than one in twelve Rhode Island homes are currently either in foreclosure or have delinquent payments of at least 90 days. These are our friends and neighbors. Many are in economic trouble through no fault of their own. It’s important for Rhode Islanders facing foreclosure to know what kind of help is available.

Last year Senator Reed and I worked hard to make sure Rhode Island was included in the Hardest Hit Fund, which helps states suffering most from foreclosures to protect neighborhood property values and keep struggling families in their homes. We got nearly $80 million in funding that is managed by Rhode Island Housing – enough to help over 13,000 Rhode Island homeowners avoid foreclosure.

One of those homeowners is John McHale, a construction worker from Pawtucket who has struggled to find work during the recession. After living in his home for four years, John found himself on the verge of foreclosure and contacted my office for assistance. We put him in touch with Rhode Island Housing, and the Hardest Hit program helped to cut his monthly mortgage payment by $1100. John was able to keep his home. Anyone needing assistance or information about the Hardest Hit Fund should call my office at 401-453-5294.

The problem is not just finances. Mortgage servicers have created a bureaucratic mess that serves to delay the process and frustrate homeowners – long waits on the phone, lost paperwork, frequent transfers from department to department, confusing mixed messages, and no one who’ll give their last name or make a decision.

I’ve held hearings in the Senate to highlight these problems. At the most recent hearing, Riverside homeowner Larry Britt came to Washington and testified about his 20 month struggle through this bureaucracy to obtain a mortgage modification. Larry said, “When I started the process in March of 2009, I had never been late paying any bills to any creditors and my credit score was near perfect. Since entering into a modification process…the bank has ruined my credit rating and has been the major contributor of uncertainty about my future.” Despite having reached what he believes to be a final resolution, after nearly two years of confusing and frustrating negotiations by phone and mail, Larry still wonders whether this decision is “for real.”

Based on these hearings, I have proposed legislation to support a program in bankruptcy court which cuts through the red tape by requiring lenders to meet with homeowners before foreclosing. The program has helped prevent at least 120 foreclosures in our state so far, and I hope more states will begin to follow Rhode Island’s lead.

Sadly, not every home can be saved. What we can do is make sure that the big banks and mortgage servicers, whose practices contributed so much to the nationwide housing crisis, are giving Rhode Island families a fair chance to stay in their homes. I’ll keep fighting in the Senate to see that they do.

Sheldon Whitehouse is the junior U.S. Senator for Rhode Island.

By: Sheldon Whitehouse
Source: Woonsocket Call