- Attorney General Announces Pending Subpoenas to Subprime Lenders
- New Mortgage Lending Administrative Rules to be Proposed
- Chief Justice Announced Pilot Foreclosure Mediation Program
On Thursday, November 8, 2007, Ohio Governor Ted Strickland, Ohio Attorney General Marc Dann, Ohio Supreme Court Chief Justice Thomas Moyer, and Ohio Department of Commerce Director Kimberly Zurz held a press conference announcing significant new actions designed to prevent additional home foreclosures in Ohio.
Governor Strickland earlier proposed a Compact between Ohio and the lending industry as a way to address foreclosure issues. The Compact was the key result of the Foreclosure Prevention Task Force created earlier this year by Governor Strickland as a follow up to the recent enactment of Senate Bill 185 - the Ohio Homebuyers' Protection Act. Those attending yesterday's press conference addressed several new actions in Ohio.
Governor Ted Strickland
Governor Strickland announced that the mortgage lending industry had not signed onto his proposed Compact. The industry earlier provided its own proposal, similar to the proposal of U.S. Senator Christopher Dodd (the "Dodd Principles"), detailing industry methods for working through foreclosure issues in Ohio. Governor Strickland dismissed the industry proposal as "an inadequate response." The Governor provided a comparison document detailing the differences between the Governor's Compact and the industry alternative.
The Governor also expressed disappointment that the State and the industry failed to agree on the Compact. The Governor concluded that his office had not closed the door on diplomacy, but the State was disappointed and loan servicers needed to take specific, measurable, and actionable steps to address the problem.
Attorney General Marc Dann
Some of the press conference's most pointed comments came from Ohio Attorney General Dann. Attorney General Dann said national mortgage loan servicing companies "had a chance to do the right thing, but did not." The Attorney General continued that the company's inactions spoke volumes about what he characterized as their "crass disregard" for borrowers who have been harmed by predatory lending tactics in Ohio.
Attorney General Dann stated that he fully intended to hold national mortgage loan servicers accountable by issuing subpoenas for information and records to more than a dozen companies. The Attorney General pledged to follow up the first round of subpoenas with "hundreds" of additional subpoenas within the next year against various facets of the lending industry including servicers, investment banks, and warehouse lenders.
The Attorney General announced that the subpoenas would seek information for potential violations under antitrust laws, civil rights laws, the Ohio Consumer Sales Practice Acts, as well as common law fraud. Such actions could be initiated against entities "upstream" in the mortgage transaction, including investment banks and warehouse lenders, purportedly profiting from predatory lending. Read the Ohio AG's press release.
Department of Commerce Director Kimberly Zurz
Commerce Director Zurz announced that the Ohio Department of Commerce would propose new Administrative Rules to incorporate parts of the Compact. Specific provisions of the new Administrative Rules would include, among other things:
- 6-month notice on loan re-set.
- Toll free numbers for loss mitigation
- A new "more thorough" audit and enforcement regime.
- A new annual report requirement
- A new collaboration with the AG on enforcement.
- Director Zurz and Governor Strickland announced that the new Administrative Rules could be effective within three months.
Chief Justice Moyer
Ohio Supreme Court Chief Justice Thomas Moyer outlined a new initiative to encourage foreclosure lawsuits to be mediated before any suit is filed. A pilot project is beginning in Cuyahoga, Montgomery, and Franklin Counties, and the possibility of a statewide program is being discussed as foreclosure dockets continue to increase.