Ohio Governor Strickland Announces Nine Mortgage Loan Servicers Sign Compacts to Assist Ohioans in Avoiding Foreclosure

4.7.08 - Columbus, Ohio - Ohio Governor Ted Strickland today announced that nine mortgage loan servicers agreed to sign a “Compact to Help Ohioans Preserve Homeownership,” the first agreement of its kind in the nation.

In a Governor’s Office ceremony this morning, executives from six mortgage loan servicers signed a document pledging that they will work with the state in making every possible attempt to prevent default loans and foreclosures in Ohio.

Foreclosed shanty: Photo by Sharyn Morrow (CC)

Executives from three other companies mailed signed copies.

“Home ownership is the very foundation of the American dream,” Strickland said. “I am very encouraged that these loan servicers have stepped forward and pledged to follow the common sense principles we outlined in our compact. These steps will reduce foreclosures in Ohio and bring stability to the families and communities affected by this crisis.”

“At the same time I would urge all Ohioans facing possible foreclosure to contact your loan servicer immediately to discuss your financial situation or call the State of Ohio’s Save the Dream Hotline. It’s a call that can help save your home,” Strickland said.

The loan servicers that signed a compact are:

* Carrington Mortgage Services
* Citi
* GMAC RESCAP/Homecomings Financial
* HSBC Finance Corp.
* Ocwen Financial Corp.
* Option One Mortgage
* Saxon Mortgage Services
* Select Portfolio Servicing
* Litton Loan Servicing

The six principles agreed to by the loan services include a willingness to:

* Engage in a substantial and large-scale loan modification effort for adjustable rate mortgage resets and subprime mortgages.
* Identify, evaluate and make good faith attempts to contact at-risk or defaulting borrowers as soon as possible.
* Modify loans to the extent permissible within existing fiduciary, contractual or other legal obligations and in accordance with prudent mortgage lending and servicing practices.
* Create incentives for staff and foreclosure counsel to modify loans rather than foreclose.
* Report progress to the Ohio Department of Commerce.
* Enter into a non-binding agreement with the State for some defined period of time. (The agreements extend to June 30, 2009.)

The agreements follow the governor’s proposed “Compact to Help Ohioans Preserve Homeownership” announced on October 9, 2007. At that time, the governor asked the servicers to review the proposed compact and submit any comments by October 22, 2007.

On November 9, 2007, after the response to his proposal primarily came from their trade association and not from the individual servicers, the governor announced that the response was inadequate and that nothing meaningful had been offered. He said he was open to talk with the individual servicers.

Kimberly Zurz, director of the Ohio Department of Commerce and chair of the governor’s Foreclosure Prevention Task Force, met with many servicers and their trade associations. At that meeting, the representatives discussed the proposed compact and agreed on the six principles, which substantively matched the spirit of the original compact.

After extensive negotiations in recent months, the servicers expanded upon the six principles, which led to today’s agreement.

“We are pleased that these servicers have joined in signing a compact,” Director Zurz said. “I hope that even more servicers will join their colleagues and the State of Ohio in this good faith effort to help Ohioans stay in their homes.”

The Save the Dream hotline number is 1-888-404-4674.

Source: Ohio Governor

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