03/02/2009 - Bills would require lenders to meet with homeowners to avert foreclosures (Indianapolis Star)

Indiana bills would require lenders to meet with homeowners to avert foreclosures

State legislation would require lenders to meet with homeowners to discuss renegotiating mortgages

By Bill Ruthhart
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State lawmakers appear poised to give Hoosiers facing foreclosure an extra shot at working out a deal to save their homes.

At the midpoint of the 2009 legislative session, both the Republican-controlled Senate and the Democrat-controlled House have passed bills that would force lenders to meet with borrowers hoping to renegotiate the terms of their mortgages.

Senate Bill 492 and House Bill 1633 would give courts the authority to order lenders into a settlement conference, as long as the homeowner facing foreclosure asks for it.

Authors of the legislation say the goal is to compel lenders to have a face-to-face session with borrowers. The bills also would require large, typically faceless mortgage firms to have a representative locally with the authority to thrash out a solution.

Often, borrowers can't get someone on the phone with the clout to resolve a problem mortgage, said Sen. Karen Tallian, D-Portage.

"The lender is no longer Jimmy Stewart at the Bedford Falls Savings and Loan, and the lender's attorney is no longer the guy down the street," said Tallian, referencing the classic film "It's a Wonderful Life."

"We have a real problem with these out-of-state lenders who just don't have anyone in charge here," she said.

Neither bill would specifically require lenders to work out a new payment plan with the homeowner. But just forcing those lenders to show up at the bargaining table could help homeowners battling to hold on to their homes, said Rep. Woody Burton, R-Greenwood.

HB 1633 passed the House last week by an 88-7 vote, and SB 492 passed the Senate on a 46-3 tally.

Despite those wide margins of approval, some lawmakers expressed misgivings.

Sen. Brent Steele, R-Bedford, said the legislature was creating too many hurdles for lenders and only protracting what are often inevitable foreclosures.

House Minority Leader Brian Bosma, R-Indianapolis, said he's concerned that requiring settlement conferences and other provisions of the bills -- such as sending additional foreclosure notifications to borrowers -- might be too burdensome for lenders.

"We have huge new regulations for lenders who have lent money in good faith to buyers," Bosma said. "Not all Indiana lenders are the New York bad guys who have put together these shady securities deals that have caused this whole economic problem."

Still, he acknowledged the issue is popular with lawmakers this year.

This week, SB 492 will move to the House, and HB 1633 will go to the Senate. If both chambers pass bills, any differences in the two versions would be worked out in April conference committees.