A Democratic state lawmaker is sponsoring a bill that he says will “keep homeowners in their homes,” but it's one that has not garnered any support from Republicans thus far.
House Bill 1017 would allow homeowners who have modified their mortgage interest rates to keep those same rates if their loans are transferred to another bank.
The bill's sponsor, Rep. Steve Lebsock, D-Thornton, said during a recent legislative committee hearing that banks sometimes do not properly communicate when a person is in the process of modifying a loan. When the loan transfer to another servicer occurs, homeowners end up receiving “a Dear John letter,” notifying them of the transfer.
But, “in a minority of cases,” the loan ends up getting transferred without the new servicer even knowing that the loan has been modified. Therefore, the new bank refuses to honor the modified rate, leaving homeowners confused and without recourse, Lebsock said.
“Essentially, the left hand doesn't know what the right hand is doing,” Lebsock said.
That happened to Daniel Graham of Aurora, who testified during a recent House Business, Labor, Economic and Workforce Committee hearing about his “nightmare” experience of getting caught between two banks and two separate mortgage rates.
Graham said that a bank recently foreclosed on his home — one that had been in his family for 34 years — after it refused to honor a modification that he and a previous bank had agreed on.
“Trying to find help from people when you're going through this? It's not out there,” Graham testified. “People, please. This is something that is needed. I am going through this nightmare right now.”
The bill is on its way to the Senate after it passed the House of Representatives Jan. 29, with Democrats supporting it in a 37-28 party-line vote.
Rep. Bob Gardner, R-Colorado Springs, said he voted against the bill in part because he “couldn't get a straight answer as to how big of a problem this was.”
Gardner said it is a “feel good” bill that doesn't really do anything.
“I'm not going to vote for it because it sounds like a nice thing to do,” Gardner said.
Lebsock said he was “troubled” that the bill didn't garner a single Republican vote in the House, especially after representatives from Colorado banking and realty groups voiced their support of the bill during the committee hearing.
“It's very puzzling to me that we didn't get bipartisan support,” Lebsock said.
But Gardner said the freshman representative shouldn't be too surprised.
“He'll be puzzled about a lot more things that happen here,” Gardner said.