This week, Ohio Gov. Ted Strickland proposed the establishment of a compact between subprime mortgage servicers and the state, aiming to tackle the increasing number of foreclosures in Ohio.
The proposed compact comes as part of Strickland's response to the Ohio Foreclosure Prevention Task Force's recommendations issued Sept. 10. Strickland commissioned the task force in March 2007 to address Ohio's foreclosure rate, which has ranked among the highest in the country.
"I look forward to partnering with the servicers to decrease foreclosures in Ohio and bring stability to the families and communities affected by this crisis," Strickland said. "We will continue to talk with servicers and listen to their feedback as we pursue the components of this compact, and it is my hope that they join us in a unified effort to protect Ohio's homeowners."
Through the compact, the governor is asking servicers to work with the state in making every possible attempt to prevent defaulted loans and foreclosures in Ohio. The compact calls for servicers to increase outreach and education to borrowers, especially in the areas of loan modifications and rate changes. Under the compact, servicers are asked to take all measures to increase loan workouts, including adjusting their staff and resources to accommodate major improvements in preventative efforts and loss mitigation.
If loan modification efforts fail, the compact calls for servicers to provide adequate and advanced notification of the intent to proceed with a foreclosure. Under the compact, servicers should also submit a monthly, public report to the Ohio Department of Commerce documenting the total number of subprime, owner-occupied residential mortgage loans, the type and percentage of workouts and foreclosures initiated, and other information describing their progress and commitment to the compact.
Servicers are asked to submit any comments in response to the compact by Monday, Oct. 22. In turn, the governor's office will publicly release the final proposed compact on Thursday, Nov. 8.
According to Strickland, the compact will remain in effect until the foreclosure filings in Ohio decline for four consecutive monthly measurement periods or until Dec. 31, 2010.
"Under this compact, servicers are asked to agree to make good-faith efforts to change the culture of subprime lending in Ohio," Strickland said.
In addition to the compact, Strickland has directed state agencies to implement several of the Task Force's recommendations.