Goddard: Borrowers need a 'bill of rights'

Mortgage companies would need to act in good faith with debt-strapped homeowners, communicate promptly, render loan-modification decisions within 30 days and take other consumer-friendly steps under a "borrowers' bill of rights" proposed for Arizona.

Attorney General Terry Goddard, a candidate for governor, on Friday called on the Legislature to enact a bill ensuring that borrowers are treated fairly by the big banks and other firms that service mortgages in the state.

He said the time was right for setting rules of conduct for mortgage firms after four years of fielding the same types of borrower complaints.

"The abuses haven't slowed down," Goddard said at a news conference. "If anything, they're accelerating."

He cited problems such as failures by mortgage firms to communicate clearly, act promptly and coordinate their dealings with homeowners so that, for example, people seeking a modification don't have their homes foreclosed in the meantime.

Steve Wilson, a spokesman for the Attorney General's Office, said the Dodd-Frank financial-reform act signed in July clarified that Arizona and other states have authority to enact such legislation. Arizona would be among the first states to do so, he said.

A decision announced Thursday by all 50 state attorneys general to investigate foreclosure practices provided further momentum for the bill of rights.

Goddard said many of the proposed items are based on terms that Wells Fargo agreed to in a settlement with Arizona earlier this month.

That accord could result in more than 1,700 Arizonans receiving loan modifications worth more than $150 million.

"We need something that's industrywide," Goddard said, estimating that at least 60 mortgage-servicing companies hold home loans in Arizona.

"Frustration is at an extraordinarily high level."

Among other things, the bill of rights would impose some general timetables on mortgage firms, including a need to acknowledge a loss-mitigation request within 10 days and a requirement to make a decision on a loan-modification or similar request within 30 days of receiving required paperwork.

Violations would be subject to prosecution under Arizona's Consumer Fraud Act.

by Russ Wiles The Arizona Republic Oct. 16, 2010 12:00 AM



Goddard: Borrowers need a 'bill of rights'