A proposal that no lawmaker has publicly criticized has been in danger of failing to win approval in the 2011 legislative session. As Representative Gary Worthan of Storm Lake explains, it has to do with the rights of Iowans who’re being foreclosed upon.
“It requires a lender to give notice to someone that they’re foreclosing on that there is an option out there for mediation and counseling on foreclosure procedures,” Worthan says.
If no action is taken by the legislature this month, lenders would no longer to required to make that disclosure after July 1st. Under current law, banks or other creditors that are foreclosing on property must notify borrowers they can get free mortgage counseling and mediation through Iowa Mortgage Help, a program run by the attorney general’s office.
“We have tried to put this on several different bills this session,” Worthan says. “This is very, very important to the attorney general’s office.” Members of the House voted to tack the proposal onto the huge bill that cleared the House on Wednesday. The Iowa Mortgage Help program is financed with federal funds.
In some cases, mediators help borrowers avoid foreclosure by getting reduced interest rates or other loan modifications on the loan. Since March 1st of 2008, about 5,000 Iowans who contacted the Iowa Mortgage Help program for that kind of assistance were able to avoid foreclosure.