Real Estate
6:00 am
Thu July 21, 2011

State homeowners gain new rights when facing foreclosure

Starting tomorrow, struggling homeowners in Washington have new rights. 

The Foreclosure Fairness Act signed into law in April is designed to prevent unnecessary foreclosures primarily by requiring banks to take part in mediation if borrowers ask for it and doubling the number of housing counselors.

One homeowner who helped force the foreclosure issue into the spotlight is Seattle resident Marilyn Takemaru.

Her home in south Seattle is a modest rambler that doesn't look like much from the outside, but inside it’s beautifully decorated and packed with possessions carefully collected over a lifetime. It has been Takemaru's home for more than thirty years, and she’s not willing to give it up. 

“If I walk away from it, if I lose it, I’ve got nothing," she said. "This is all I have.”

Takemaru and her late husband bought the house back in 1978 for about $35,000.  They refinanced several times, taking money out to pay for their dyslexic son’s special education. Now the self-employed house cleaner is 60 years old, on her own and owes more than $241,000 on the house. 

“Hopefully, the housing market comes back and it’ll be worth something.  Right now I owe more than what it’s worth," she said.

Her troubles really began at the height of the housing market when she found herself weighed down with a 10-percent interest rate and payments she couldn’t afford.

Forcing the bank's hand

Desperate, Takemaru joined a group of protestors and occupied the regional headquarters of Bank of America to force the bank into modifying their loans.

About 50 members of “OUR Washington” were facing foreclosures last summer when they carried signs and chanted slogans at the bank's headquarters. Their protest was broadcast on TV. Afterward, Takemaru got her modification – and a personal call from a bank president.

Her mother worried she’d be arrested and thrown in jail, so Takemaru wore a wide-brimmed hat to hide her face from the cameras.  But she’s come to realize that wasn’t really necessary.

“People are always a little bit ashamed to be in this situation, but they have to realize that it isn’t your fault.  I mean it hits everybody," she said. "In fact the police were pretty nice about it, because think about it: They could be in foreclosure.  Some of them were just smiling.  So, they’re affected by it too."

30,000 at risk

Experts agree home foreclosure is a widespread issue affecting people at many levels of income. David Leen is a Seattle attorney who specializes in helping people in foreclosure.

“I’m certain that there are millions of people in this country like her," he said. "She’s got a property that’s so far under water that it’s going to be impossible for her to ever realize any kind of benefit from home ownership."

State authorities say about 30,000 families in Washington are at risk of foreclosure this year.  That threat formed a big of part of the argument in favor of the new Foreclosure Fairness Act. 

Face-to-face solutions

Leen says it’s a good first step because the new law will force lenders to devote enough time to a situation to come to a logical resolution.

“This will require a human being to sit down with a homeowner.  And I think, in a one-hour period of time with a mediator there, they’ll be able to see if there’s an economically sensible way to resolve the problem.  And that will be beneficial.”

Also, the new law levies fees to be used to hire more housing counselors.  Before the law was signed there were only about 40 statewide.  Now, the hope is to at least double that number by the end of this year.

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