May 12, 2011 – Both Tennessee’s House and Senate Judiciary Committees have now voted to approve a proposal by the Tennessee Bankers’ Association to reduce the state’s restrictions on lenders seeking to foreclose on homeowners and businesses.
Shame on all groups and persons supporting this bill for creating legislation that will make it easier for hard-working individuals to lose a piece of the America’s dream – home or business ownership.
This bill illustrates beautifully the power of big business and lobbyist on the General Assembly, as many of the state’s office holders obviously have a blatant disregard for the welfare of people who elected them into office.
Thankfully, we can report that Sen. Mae Beavers, who chairs the Senate Judiciary Committee, was one of the four members who voted against it. Unfortunately, five of her colleagues voted to move it out of committee.
Due to widespread and well-documented misconduct or mistakes by mortgage lenders, the majority of states require banks to file court action and convince a judge of its legal entitlement to foreclose before proceeding.
But not in Tennessee, which is one of only five states that allow banks to foreclose without any judicial oversight, making it one of the easiest and cheapest states in which banks can foreclose.
Currently, foreclosure notices, as required by state law, must run three times in a county newspaper and are designed to alert other parties with a financial interest in the property – as well as neighbors and community associations that might come to the assistance of the homeowner.
However, if this bill becomes law, the number of required newspaper notices would drop from three to two and significantly reduce the information contained in them. No longer would the address be published, but rather the plat number and the book and page number of where it could be found in the county’s Registrar’s Office. How many of you know your property’s plat number, much less the book and page number its recorded on at the courthouse?
If Mr. Isaac Vaughn, an 80-year-old Korean War veteran had lived in one of the 45 states that require court oversight, he may not have lost his home. His reverse mortgage was called by Bank of America, who bought out Countrywide Home Loans, even while his case was under review for improper lending practices by the bought-out mortgage company.
Believing the bank had wronged him and understanding that they were investigating the matter, Mr. Vaughn told the Senate Judiciary Committee he only learned of the bank’s true intention through the three newspaper notices.
Now, they want to reduce even more the number of notices published.
In our opinion, banks are looking at this bill as a way to recoup some of their losses during the recent economic downturn – which in large part can be blamed directly on the big banks that failed to carefully scrutinize potential borrowers’ repayment abilities before making the loans in the first place.
And the politicians voting in favor of this obviously care more about the banks’ lobbyists – who lined their collective pockets to the tune $200,000 in the 2010 election cycle – than they do about the individuals who elected them to look out for their interests.
According to a recent guest editorial in the The Daily News in Memphis by Webb Brewer, a partner in the Memphis law firm of Brewer & Barlow, reduction in the publication of notices of foreclosure would also reduce the number of people who might come to a foreclosure sale to bid on the property if a homeowner is not able to avert the sale.
Brewer also wrote that currently, in most cases, mortgage companies purchase the properties they foreclose on for far less than the real value of the property, leaving a large deficiency. The bill under contemplation would make this “short sale” situation worse.
No one but these mortgage brokers will show up to bid on these properties, and the bids are likely to be at carpetbagger rates, further dropping the value of all the homes in the neighborhood.
And before anyone asks the question, we’ll answer it for you: Would this law also hurt our revenue stream as a newspaper? In complete honesty and in the spirit of full disclosure, the answer is yes. We have a vested interest in the outcome of this bill because it would reduce the revenue we receive from the published foreclosure notices.
However, that said, even if we were not going to be impacted by this legislation, we would speak out against it because of its gross unfairness to the many thousands of homeowners and small business owners.
The bottom line is this bill will increase foreclosures, increase short sales and reduce the property value of every single homeowner in the state.
The bill is scheduled for a full vote of the House of Representatives today and will possibly go before the full Senate on Monday. We urge you to call your representative – either Rep. Mark Pody or Rep. Linda Elam – now and tell them you expect him or her to vote “no” on House Bill 1920. Also, please call and thank Sen. Mae Beavers for voting “no” on Senate Bill 1299 in committee and to please continue that vote in the full Senate. Below is the contact information for each at the capitol.
Rep. Mark Pody (R-Lebanon)
Phone: (615) 741-7086
Fax: (615) 253-0206
Rep. Linda Elam (R-Mt. Juliet)
Phone: (615) 741-7462
Fax: (615) 253-0353
Sen. Mae Beavers (R-Mt. Juliet)
Phone: (615) 741-2421