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A Utah House committee Tuesday voted down a bill that would have given homeowners the name of someone with whom they could try to renegotiate a loan during the foreclosure process.
The Business and Labor Committee voted 6-5 t against HB326 despite sponsor Rep. LaVar Christensen's assurance it was tilted in favor of banks, mortgage lenders and note holders.
At the time a default notice is filed, the bill would have required the holder of the mortgage note to register the name and contact information of a "special servicer" who had authority to renegotiate the terms of a loan before a property could be sold. It also would have required the servicer to give "reasonable consideration" to a home-owner's request for relief.
The bill pushed by the Draper Republican was created in response to thousands of foreclosures and threatened foreclosures in Utah, the result of the bursting of the real estate bubble in 2007. Home-owners say lenders have failed to negotiate loan modifications with them and, in some cases, they cannot even find anyone to speak to about their loans.
Six Republicans voted against the measure, while four Republicans and one Democrat voted in favor. Two Democrats and one Republican were absent.
Christensen told the committee his bill had changed considerably after talks with lenders in the state who opposed the measure. He described it as a modest attempt to help resolve problems, compared with what other states are doing.
"I've tried at every turn to make this friendly to the financial stakeholders," he told committee members, saying the part of the bill that requires a good-faith negotiation "tilts in favor of the lender."
Despite those assurances, Utah Housing Corp. CEO Grant S. Whitaker and Scott Simpson of the Utah Credit Union Association opposed the bill.
"To classify this as lender-friendly legislation is not accurate from our perspective," said Simpson.
He argued that lenders are involved in loan-modification negotiations before a home goes into the foreclosure process.
"To claim the lender has not been involved in modifications in that time frame is just not accurate," Simpson said.
Rep. Curt Webb, R-Logan, who voted against the measure, said the problems experienced in Utah are the same nationally. He alluded to issues being decided in various courts around the country over who has the legal authority to foreclose on a property.
"The authority to negotiate and the authority to foreclosure, all those things are up in the air nationally," he said.
Christensen could still try to bring the bill back either before the committee or on the House floor. The legislative session ends March 10.
Votes on HB326
Yeas • Dunnigan, Froerer, Morley, Pitcher, Wiley
Nays • Bird, Gibson, Ipson, Kiser, Last, Webb
Absent • Bis-kupski, D. Brown, Duckworth