Editorial: Protect the state’s homeowners

Wednesday, January 31, 2018

Even in good times, New Hampshire suffers about 1,000 mortgage foreclosures per year. In bad economic times, let alone in the depths of the last recession, that figure more than triples.

Most foreclosures don’t follow the maddening path of Jeff Bradley’s loss of his Epping home, a tale of woe told by Monitor State House reporter Ethan DeWitt on Sunday. But in this age when mortgages are sliced, diced, packaged and sold to far off investors, some do.

We don’t know what went wrong in Bradley’s case or why he didn’t know that his home had been sold until its contents were being removed. But sometimes, when property is lost to foreclosure, mistakes are made. Communication chains break down. Documents are misfiled or lost. Sometimes fraud occurs.

Stephanie Bray, director of the foreclosure project at New Hampshire Legal Assistance, told DeWitt that she’s heard of dozens of cases of homeowners who failed to receive eviction notices until it was too late to challenge them in court, which is their right. House Bill 1682, sponsored by Wilton Rep. Kermit Williams, Rep. David Luneau of Hopkinton and others, would eliminate what is a heartbreaking and sometimes preventable experience.

The bill calls for judicial review by a superior court judge of all evictions. The process, one used by about half the states, guarantees that homeowners are given adequate notice, that all necessary documents have been submitted and that the mortgage holder, who may be several steps removed from the original lender, is entitled to foreclose on the loan.

The banking industry opposes the change, but its arguments to date haven’t been persuasive. A quick comparison of mortgage interest rates charged by New England states that require judicial review of foreclosures and those that don’t show little impact on consumers in the form of higher loan rates. According to the website Bankrate.com, New Hampshire’s current 30-year mortgage rate averages 4.17 percent, 3.5 percent for a fixed 15-year loan. The comparable rates for Connecticut, a state that has long required judicial review, are 4.13 and 3.48 percent, respectively. There were also negligible differences in the rates charged in Rhode Island, where most foreclosures do not require judicial review, and Maine, where all do. And even if borrowers had to pay a wee bit more, they would get something for their money – the assurance that they would not be foreclosed upon and evicted wrongly or without adequate warning.

The change would not be burdensome for the courts. Foreclosure cases are routine civil procedures that cost, according to the state Administrative Office of the Courts, about $250 to process. That sum equals the filing fee a lender seeking to foreclose would have to pay. Since filing fees go not to the courts but into the state’s general fund, the Legislature would have to allow for that when setting the court’s budget.

New Hampshire has a relatively low foreclosure rate. Only one in every 3,362 mortgages go south compared to a national average of one in 2,043. Nonetheless, adopting judicial review would help the New Hampshire residents most likely to need protection: homeowners in Sullivan and Coos counties, where foreclosure rates are more than double the state average.

HB 1682 deserves to pass.