Bill to toughen home foreclosure mediation gets support
The Associate Chairman of the American Association of Retired Persons, Eddie Olivera-Robles, on Wednesday backed a measure amending the Compulsory Mediation and Home Preservation Act, to give it more teeth when it comes to foreclosure proceedings.
Olivera said Puerto Rico’s law requires that the debtor respond to a foreclosure lawsuit before requesting mediation. This, despite the fact that 98 percent of cases are “in absentia,” and a mere 2 percent is seen in court.
“This requirement eliminates an unbridgeable obstacle in Puerto Rico’s mortgage mediation process,” he said.
Given this, he highlighted the law’s weaknesses and made a comparison with the state of Connecticut, explaining that the success of its mediation program is due to three principles: access by the debtor, cooperation from creditors, and an effective compliance audit through independent evaluations by state agencies — which is at their discretion. Those same three weaknesses plague Puerto Rico’s mediation program, he said.
“In Connecticut, the debtor is not obliged to respond to the foreclosure lawsuit to be eligible for mediation. The law only requires them to complete a request for mediation before the court within a period of 15 days from the time they are served,” he said in testimony, adding that if the effect is to provide the widest possible access to this mechanism, this point needs to be tempered in the local law.
These expressions took place during a public hearing for by the Committee on Banking, Trade and Cooperatives, chaired by Sen. Eric Correa, for Senate Resolution 117, introduced by Sen. Carmelo Ríos.
The resolution orders the Committee to conduct an investigation of the processes mandated by Law 184-2012, which dictates the mediation process between the mortgagee and the mortgagor when it comes to foreclosures of Puerto Rico housing properties.
In this regard, Mildred Santiago, executive director of the Puerto Rico Cooperative League, which represents about 118 credit unions, said the group already has a new product as an alternative to a foreclosure scenario.
“The credit union takes over the ownership of the residence allowing the co-op member to continue living in it by paying a reasonable rent,” she said.
“Through this option, the member can once again opt to acquire the property, in which case the cooperative will credit everything the member has paid as rent to the new loan,” she said.
“This allows co-op members to remain in their residence while achieving economic recovery and possibly save it without extreme fees,” she explained in her testimony.
Faced with the question regarding the correct number of executions and individuals involved in foreclosure processes in Puerto Rico, AARP Representative Ricardo Ramos-González suggested requiring banks to provide the number of loans sold and who sold such loans to the Office of the Financial Institutions Commissioner, to have specific statistics on executions and available products.
On the other hand, the Resolution’s author Ríos was emphatic in saying that one of the points he will defend is the creation of Chambers Specializing in Mortgage Executions, as the number of property execution cases in Puerto Rico’s courts is approaching 50,000.
Ríos said it was something that was contemplated by the law and was approved by the Senate, but then was removed before being signed by former Gov. Alejandro García-Padilla.
When a bank decides to sue, and after the debtor responds to the complaint or makes a responsive argument, the judge has 60 days to refer the case to the compulsory mediation process prior to leading a foreclosure process of any main home property in Puerto Rico by any bank.
Law 184-2012 is in force, and the court and the banking sector should guide the defendants to avoid property foreclosure, according to the measure’s explanatory memorandum.