The national recession continues to hammer Iowa. Our state’s unemployment rate rose to 4.8 percent in January, while the national rate climbed to 7.6 percent, the highest since 1992.
This economic slowdown is hurting Iowa homeowners, and the pain is not limited to risky subprime mortgages.
John Gianola, of Iowa Legal Aid's Foreclosure Defense Project, recently reported that “a typical foreclosure case now is people who may have had reasonable long-term, fixed-rate loans, but because they lost their jobs, they can no longer afford even a conventional mortgage."
Iowa's home foreclosure rate hit a 10-year high last year. More than 30,000 mortgages were delinquent or in foreclosure in the last quarter of 2008, according to the Mortgage Bankers Association.
This is everyone’s problem. Each neighborhood foreclosure threatens the financial security of our communities and lowers the value of every house in the neighborhood.
In Iowa, the national economic problems are making the situation even worse for communities affected by last year’s natural disasters, but in the Legislature, we’re working in a bipartisan way to help struggling families make it through these tough times.
First, because many struggling homeowners aren’t aware of their rights and alternatives to foreclosure, the Senate Judiciary Committee has passed legislation requiring creditors to inform homeowners of mediation and counseling services before a home foreclosure begins.
If the creditor fails to comply with this requirement, the courts must slow things down and give homeowners a chance to avoid foreclosure. If you or someone you know needs advice on mortgage assistance, go to
www.IowaMortgageHelp.com. The site is maintained by Iowa’s Attorney General.
Second, the Senate Commerce Committee is moving to toughen state laws governing mortgage bankers and brokers by requiring criminal history and credit background checks, pre-licensure and continuing education, national licensing, and a net worth, surety bond or recovery fund.
Third, the Commerce Committee is taking steps to crack down on debt settlement firms, which are businesses that promise to settle a consumer’s debts for a fee. The consumer usually pays the fee up front. If the debt settlement firm fails or makes a half-hearted effort, the consumer is out the initial fee and left in a worse financial state.
New legislation would expand regulations to cover anyone involved in consumer debt settlement by requiring written contracts, limiting fees and mandating consumer disclosure. This disclosure incluedes estimated total fees, a statement that the debt manager cannot guarantee results, and acknowledgement that consumer may quit the service at anytime without penalty.
Rising unemployment and foreclosure rates are signs that the national recession is worsening, but I’ll keep standing up for Iowa’s middle-class families.
