On Wednesday, February 1, Prosperity Indiana's policy team and one of our members, Regina Flowers, a housing counselor with the Community Action Program of Evansville & Vanderburgh County, Inc., delivered powerful testimony supporting SB 227. The bill would preserve critical foreclosure counseling resources for Hoosier homeowners in trouble by extending the foreclosure filing fee which is due to sunset in July of this year. The fee is paid by lenders each time they file a foreclosure proceeding. Those resources are then directed to statewide efforts to prevent foreclosures, through the Mortgage Foreclosure Counseling and Education Account. The bill was not voted on during the hearing, but received favorable consideration by committee members, based on discussions during the proceedings. Our one pager background on the bill can be found here. Thank you, Senator Jim Merritt, for your leadership on this initiative! Read on for Prosperity Indiana's full testimony.
COMMITTEE ON PUBLIC POLICY, TESTIMONY IN SUPPORT OF SB 227, KATHLEEN LARA, POLICY DIRECTOR, FEBRUARY 1, 2017
Chairman Alting and members of the committee,
Thank you for the opportunity to speak this afternoon. My name is Kathleen Lara and I am the Policy Director for Prosperity Indiana, a network of 230 non-profit organizations, units of local government, private companies and institutions dedicated to building strong communities.
Working to advance policies that respond to urgent human needs and improve the quality of life in communities of all sizes throughout the state is essential to our members. That is why I come before the committee today urging strong support for SB 227. I would also like to thank Senator Merritt for this leadership on this important piece of legislation.
Around the state, our members and partners work diligently to help those few economic opportunities build assets and achieve housing stability through a large and diverse portfolio of programs. Housing counseling, and in particular, foreclosure prevention counseling, is a keystone of those efforts as it provides emergency assistance for homeowners in crisis.
The foreclosure filing fee, which helps to fund the Foreclosure Prevent Network hotline and counseling services as Senator Merritt mentioned is imperative to interventions statewide. This counseling assistance includes managing household finances to resolve a delinquency, informing the client of options for resolving the delinquency, helping negotiate with lenders, providing information on financial assistance programs, explaining the foreclosure process, providing referrals to other service providers (including legal counsel), and sometimes helping to find alternative housing.
We know that foreclosure prevention housing counseling is extremely effective in helping struggling Hoosiers save their homes. The evidence is not just anecdotal. According to the latest figures from HOPE NOW, which is included in the papers I passed around, 770 permanent home loan modifications occurred in Indiana in the 3rd Quarter of last year alone. Additionally, two of every five homeowners who go through the GET HOPE hotline and attend a settlement conference, also funded through the filing fee proceeds, achieve a non-foreclosure workout.
In May of last year, the Department of Housing and Urban Development released a publication finding that counseled clients were 2.83 times more likely to receive a loan modification and were 70 percent less likely to redefault on a modified loan than were similar borrowers who were not counseled. The publication also reported homeowners who received a mortgage modification to resolve a serious delinquency were 45 percent more likely to sustain that modification if it was obtained with the help of housing counseling.
We are fortunate today to be joined by one of our members, Regina Flowers with the Community Action Program of Evansville who will speak to her experiences in working with struggling homeowners first-hand. She will share what consumers are facing even though foreclosure rates throughout the state are below the rates we saw during the peak of the housing crisis. We know that the work is not complete and that is why it is so critical to extend the foreclosure filing fee before it is set to expire. According to the GET HOPE data, at the end of the 3rd quarter in September, there were still 20,663 loans over 60 days delinquent and 639 foreclosure starts in Indiana. Further, RealtyTrac found that in December, the number of properties that received a foreclosure filing in Indiana was 54% higher than the previous month and 30% higher than the same time last year even though nationwide, the number of properties that received a foreclosure filing was 1% lower than the previous month and 17% lower than the same time last year.
There is still an urgent need for the counseling and legal resources funded in part by the foreclosure filing fee proceeds and it is important to note those funds fluctuate depending on the number of foreclosures filed. So, if there are fewer foreclosures, the proceeds are diminished. By the nature of how the fee was set up, we are funding these programs in proportion to need throughout the state.
As a representative of members who are interested in both saving the homes of Hoosiers and stabilizing local real estate markets to create economic opportunity for working families, I urge your support for the measure and thank you for your time today.
https://www.hudexchange.info/resources/documents/Housing-Counseling-Works.pdf
