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State of Rhode Island General Assembly
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Governor signs bill that extends foreclosure mediation law
STATE HOUSE – The governor has signed into law legislation (
) sponsored by Sen. Harold M. Metts and Rep. Mary Duffy Messier to add five years to the life of an expiring law that keeps families in their homes and avoids foreclosure.
The bill, which the sponsors submitted on behalf of Attorney General Peter F. Kilmartin, extends a July 1 sunset provision in a 2013 law that requires mortgage lenders to initiate and participate in mediation efforts with homeowners facing foreclosure in an effort to prevent it. The bill moves the sunset provision to July 1, 2023.
The sponsors said the law provides critical protection for homeowners, requiring their lenders to make a good-faith effort with the help of an independent mediator to try to come to an agreement to that helps save their homes from foreclosure.
“Foreclosure devastates families and neighborhoods. Mediation helps people find ways they can save their homes and all that they’ve invested in them. Rhode Island and our communities were hit very hard by the foreclosure crisis, and this act made a real difference in stemming that tide and preserving families’ homes. While I hope to see this provision made permanent, extending it for another five years will help many more Rhode Islanders avoid foreclosure, stabilizing their families and neighborhoods,” said Senator Harold M. Metts (D-Dist. 6, Providence).
According to RIHousing, which administers the program, over 70 percent of homeowners who have taken advantage of the opportunity for mediation are able to reach an agreement that allows them to stay in their home.
“This law has been a lifeline for so many families who were on the brink of losing their homes. Mediation is in the best interest of all parties, because it keeps people in their homes, paying their mortgages at a rate they can afford. The value of this law to Rhode Island, our residents and our communities has been well demonstrated, and it should be extended,” said Representative Duffy Messier (D-Dist. 62, Pawtucket).
While not all eligible homeowners participate in the mediation process, those that do are often able to remain in their home. Since the act became law in 2013, 990 homeowners have sought mediation. Of those that complete the process, approximately 50 percent resulted in homeowners receiving a loan workout from their mortgage provider, with another 24 percent ending without the mortgage provider receiving certification needed to proceed to foreclosure.
“The Foreclosure Mediation Act has proved to be successful in keeping many Rhode Islanders in their homes, and while the economy has improved and the housing market is once again strong, Rhode Island is still 13th in the country in the percentage of loans in foreclosure. The impetus for the original passage of this bill was the foreclosure crisis but good public policy — and this is good public policy — shouldn’t only exist during times of crisis. Their true purpose is to help stave off crises,” said Attorney General Kilmartin.
Before the law took effect, Rhode Island had one of the least restrictive foreclosure procedures in the country. Lenders were merely required to provide notice to the homeowner of their intent to initiate foreclosure, and public notice of the foreclosure in the newspaper. There was no required court involvement and no requirement that lenders meet with borrowers to explore alternatives to foreclosure.
At the time, homeowners across the state were struggling with unemployment or underemployment, and with few protections in place, many lost their homes to foreclosure. Those foreclosures had a devastating impact, not only on families who lost their homes, but also on the greater community. Foreclosed properties often mean increased crime, declining property values and reduced quality of life for all residents.
For more information, contact:
Meredyth R. Whitty
State House Room 20
Providence, RI 02903
Lt. Governor's Office
Secretary of State
Link to Public Records Request