Sen. Dawn Euer and Rep. Leonela Felix have introduced legislation to protect homeowners by preserving the state’s foreclosure mediation statute established by the 2013 Foreclosure Mediation Act.
“To a lender, a mortgage might just be a line on a spreadsheet. But to a homeowner, it’s so much more than that,” said Senator Euer (D-Dist. 13, Newport, Jamestown). “These additional protections help people get back on their feet, stay in their homes and keep paying their bills. That’s better for everyone.”
Before 2013, the foreclosure processes in Rhode Island had relatively few restrictions. The Foreclosure Mediation Act requires lenders to advise owner-occupant mortgagors of the availability of a “mortgage mediation process” before the lender could proceed to foreclosure. If a homeowner requests mediation, the lender is required to participate in good faith and cannot proceed to foreclosure until a mediation coordinator issues a certificate affirming that the lender has complied with the law. The statute was originally slated to end in 2018, but lawmakers passed a five-year extension. It is now set to expire on July 1.
Advocates say the law is working. According to RI Housing, over 1,500 homeowners have participated in foreclosure mediation conferences over the past ten years. About 46% of completed mediations have resulted in the homeowner avoiding foreclosure through a loan modification, reinstatement or acceptable repayment plan. The proposed legislation (S-2023 0163, H-2023 5761) would eliminate the current sunset, preserving the act’s protections for Rhode Islanders facing foreclosure.
“I know how devastating foreclosures can be for families and communities firsthand. When I was a kid, my mom got seriously sick and had to stop working for a while. She fell behind on payments and the bank refused to work with her,” said Representative Felix (D-Dist. 61, Pawtucket). “If we had had this program back then, we could have gotten on a payment plan we could afford and stayed in our home. This program has given other families security we didn’t have. It works and we should make it permanent.”
During the COVID-19 pandemic, the federal government put in place a number of protections for homeowners who were struggling with their mortgage payments. Those protections have now largely expired. That, advocates say, makes extending state-level protections even more urgent.
“For almost a decade, the foreclosure mediation law has been helping struggling homeowners avoid foreclosure and remain in their homes,” said Carol Ventura, Executive Director of RIHousing. “RIHousing is proud to play a part in implementing this important law, and thanks Senator Euer and Representative Felix for introducing legislation to ensure that these important protections will continue to be available to Rhode Island homeowners.”