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Repo Property Prevention Legislation in San Francisco

July 8, 2009

Because of the significant rise in repo property inventories in San Francisco, two city supervisors and two other city officials introduced legislation aimed at cutting down mortgage fraud and reducing repo property inventories.

The new legislation focuses on monitoring the activities of third-party private repo property prevention enterprises and making sure that they provide the services they are getting paid for. It would require repo property prevention companies to provide written contracts to homeowners and to restrict them from charging fees upfront.

City supervisors Sophie Maxwell and David Campos, together with city attorney Kamala Harris city assessor and city assessor Phil Ting, crafted the legislation because of the rising number of mortgage fraud complaints, particularly among minorities and low-income communities.

Ting and Campos also explained that the legislation would require foreclosure prevention companies to reduce borrowers’ monthly home loan payments by a minimum of 20 percent or to reduce overall monthly housing payments to 31 percent of borrowers’ monthly gross earnings or to a lower percentage. These monthly reductions should be implemented for at least five years.

Campos and Ting said that most distressed homeowners grab opportunities that give them hope to save their houses from getting included in repo property lists without making sure that these offers of help are effective or legitimate.

The city officials mentioned that mortgage delinquencies in San Francisco increased by more than twofold in the two-year period from 2006 and 2008 and that foreclosures increased by a staggering 700 percent. They said that the most affected communities are in the southeastern and southern parts of San Francisco.

Harris explained that the proposed penalties for people breaking the ordinance include a $1,000 penalty for each offense, imprisonment of up to 6 months and filing of a civil case to seek damages.

The city officials added that the penalties will send a strong message to third-party foreclosure prevention enterprises victimizing hardworking homeowners.

One example of a homeowner victimized by two opportunistic third-party enterprises is a breadwinner who missed his monthly loan payments when he was laid off. He said he looked for a third party to help him because his lender refused to work out a loan modification for him.

This homeowner said he paid the third party upfront but the third party disappeared when the loan modification resulted in higher monthly payments instead of lower payments.

According to city officials, there are San Francisco-based nonprofit counseling agencies that can help homeowners in danger of losing their houses to repo property inventories.

Learn how to find foreclosure listings.

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