Idaho attacks foreclosure epidemic 

When the Pew Center on the States released a study in late April investigating each state’s response to the foreclosure crisis, it lumped Idaho in with a group of nine states that had done nothing by the end of 2007. It listed seven possible action steps that many states had taken and failed Idaho on each.

But Idaho Department of Finance Director Gavin Gee said Idaho’s response to the nationwide epidemic of foreclosures has been neither slow nor sparse.
“It kind of boggles my mind; it baffles me that someone would say that Idaho is not doing something when we are literally doing something every single day (to respond to the foreclosure crisis),” he said when he saw the report. “Every day we’re in meetings or conference calls. … I can’t tell you how many meetings we’ve had with other agencies, with industry leaders, with federal agencies related to this whole issue.”
The Pew study puts Idaho’s foreclosure crisis on par with the national average, predicting one in 39 Idaho homeowners will experience foreclosure in the coming two years (compared to one in 33 nationally). In Nevada, Pew predicts one in 11 homeowners will experience foreclosure, while just one in 165 in North Dakota can expect the same.
But Gee, along with Idaho Association of Mortgage Brokers President Scott Stingley of Stonebrook Mortgage, said Idaho can’t compete with most of the country in terms of foreclosure rates. Stingley said according to the Mortgage Banker’s Association, Idaho ranks 41st of the 50 states for foreclosures. And though Idaho’s unemployment rate has been climbing, it has continued to be lower than the national average, keeping foreclosures relatively low.
“I also think we did not get quite as creative with subprime lending,” he said, adding that Florida, California, Ohio, Michigan and Nevada make up 65 percent of foreclosures nationally. “People were trying to take advantage of the massive runaway in house prices by trying to qualify for loans that they really didn’t qualify for. We did get a little bit of that in Idaho in 2005 and 2006, but it wasn’t years and years of it.”
Stingley said Idaho has responded “very well” to the foreclosure problem, considering that it doesn’t have much power over mortgage services. Federal action, he expects, will help with a turnaround, probably in mid-summer or early fall 2009.
The Pew Center said while it’s primarily the federal government’s responsibility to curb abusive loans and strengthen underwriting standards, homeownership is central to state and local governments’ health because it affects families’ financial security. It said states have responded to the need to get more information to homebuyers and the need to help buyers stay in their homes.
Gee said Idaho has stepped up to the plate on all possible fronts. It has helped lead efforts to beef up the mortgage licensing system nationwide, aiming to better track lenders and protect consumers. It has worked to educate the public about financial literacy and resources for avoiding foreclosure. It has adopted policies and guidelines to establish higher lending standards. It passed a Consumer Foreclosure Protection Act this year to address foreclosure rescue scams. And it has participated in lobbying for various federal regulations.
Gee said some states tried to take action “long before the mortgage crisis became a crisis,” but the federal government preempted those actions, claiming them for federal jurisdiction. He said seeing those efforts preempted made it unreasonable for Idaho attempt similar legislation.
“We have done a lot – as much or more than other states – and we continue to do a lot,” he said. “This is a huge priority for us. We deal with this on a daily basis.”

Idaho Department of Finances actions to combat foreclosure–

Avoiding foreclosure:
-provides financial literacy education info on its Web site
-provides info about financial counseling through IHFA and others on web
-directs consumers to foreclosure prevention resources on web
-passed Consumer Foreclosure Protection Act (2008)

Using all your tools:
-participates in governor’s Neighborhood Stabilization Program steering committee (est. October 2008)
-regularly meets with agencies and industry professionals to address the issue

Pre-empting high-cost lending:
-currently leads an initiative for nationwide mortgage licensing reform, increasing consumer protection and fighting fraud
-adopted Statement on Subprime Mortgage Lending to establish lending standards (August 2007)
-passed a Mortgage Loan Originator Licensing Law (effective 2006)
-adopted guidelines for nontraditional mortgages (2006)
-amended Credit Code to regulate payday loan offices (2003)
-amended Mortgage Practices Act to make licensing laws stricter, allow greater strength in combating predatory mortgage lending (2003)
-supports CSBS and SAFE Mortgage Licensing Act of 2008

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