If you face foreclosure in Rhode Island, you’re guaranteed a sit-down with your bank, to try and mediate a deal. But that guarantee is set to expire in July.
That has housing advocates and local leaders concerned that foreclosures will once again blight neighborhoods with abandoned properties. They’re pushing legislation that would extend the program, until at least 2023.
Adopted in 2013, after the housing crisis, some 700 homeowners have avoided foreclosure as a result of these mediation session, according to Barbara Fields, director of Rhode Island Housing.
“That means 679 Rhode Island homeowners got to stay in their home just in the last five years,” Fields said. “This program has no fiscal burden to the state of Rhode Island. The cost is primarily undertaken by big out of state lending institutions that can easily afford this.”
Rhode Island Housing organizes these mediations, which are offered at no cost to homeowners. In some cases, homeowners and banks are able to renegotiate mortgage terms.
“Five years ago, this bill passed because of the foreclosure crisis,” said Fields. “It was good policy, but we don’t do good policy and consumer protection, just in times of crisis. We need good policy to keep players honest and prevent major issues, before they impact families.”
But the Rhode Island Bankers Association says the cost of notifying homeowners, which falls to banks, is onerous, and the number of people who take part is just a fraction of those eligible.