House Bill 470 on non-judicial foreclosures has now been attempted to be debunked in these pages twice in recent days; first by an editorial and second by a commentary from Louisville attorney Ben Carter.
I respectfully request that bill be the subject of a news report by a staff person who actually understands the bill.
Carter is right in predicting the return of HB 470. That is because it solves a serious problem in ways that do benefit Kentucky homeowners as much as our communities and their banks.
Every Kentuckian, especially bankers, deeply regrets the fact that some of our citizens can't afford their homes in the current economy. For community bankers left holding mortgages that will never be repaid, that regret is often compounded by seeing friends and neighbors in that position.
Communities also suffer from the blight of deteriorating homes in protracted judicial foreclosure limbo. But Kentucky's onerous and fee-ridden foreclosure process falls most heavily on the homeowners whose lives are in limbo.
That's why your readership deserves to see factual and unbiased reporting on HB 470. Such reporting would explain how the bill preserves the right of homeowners, both to choose the current judicial process and to raise any substantive defenses to foreclosure.
It would affirm that the bill has nothing to do with the wrongs cited by Carter such as robo-signing or modification while foreclosing. It would clarify that the federal foreclosure protections Carter is afraid the bill would circumvent cannot be avoided by any state law. Instead, HB 470 simply offers an alternative non-judicial process, one without attorney and court fees — and without deficiency judgments.
Who would think that's a bad idea? The court system that opposed HB 470 with the admission that it would cause the courts to lose $10 million in fees — fees currently paid by homeowners in judicial foreclosures — and attorneys for whom judicial foreclosures are a primary source of income or program funding.
Many homeowners who have experienced Kentucky's costly and draconian foreclosure process would be among the first to recognize Carter's views as jaundiced and self-interested. In his rush to portray banks as oppressors, he presumes that every homeowner should share his preference for judicial foreclosure, a long and winding road with a deficiency judgment at its end — but one with attorneys and judges in the driver's seat.
Instead, some homeowners may have good reasons to prefer a non-judicial path and a better outcome. HB 470 would have added such an option. Consumer choice is always best.
We look forward to seeing that option — and the consumer's best interests — evaluated responsibly in the news section of these pages.