CHICAGO - Ohio yesterday announced free legal services for struggling homeowners in a statewide effort to stem the tide of foreclosures after a year in which the state led the nation in the percentage of mortgage foreclosures.
More than 1,100 private attorneys have volunteered to mediate foreclosure court proceedings and help restructure loans for homeowners who earn less than $54,000 a year, said Gov. Ted Strickland in a press conference announcing the program.
"Ohio was one of the states that had the least amount of consumer protections in place when this crisis started unfolding," said Strickland, who was joined by Treasurer Richard Cordray, Attorney General Marc Dann, Supreme Court Chief Justice Thomas Moyer, and members of the Ohio Bar Association. "Our effort is to do everything we can in the short term for people facing these difficult circumstances."
Ohio in 2007 had 83,230 foreclosure filings and 3.8% of all loans were in foreclosure - the highest percentage in the nation, according to figures from the Mortgage Bankers Association. In addition, 7.7% of all loans in the state were more than 30 days late at the end of 2007 - a number that suggest foreclosures will rise again this year. Foreclosure rates rose in 85 of Ohio's 88 counties last year.
The state faces a looming deficit that could be as large as $1.9 billion in part due to lower-than-expected tax collections related to the weak housing market. Officials recently lowered revenue estimates through 2009 - originally expected to increase 1% in 2008 and 0.5% in 2009, tax collections are now expected to rise 0.3% in fiscal 2008 and fall 1.5% in 2009.
Accusing the federal government of acting too slowly to address the problem, Cordray said the state would also consider changing lending regulation in the future.
"It would have been nice to have regulatory changes a few years earlier, when it could have prevented the problem," Cordray said. "None of us expected this problem on this scale, and it's our obligation to fight our way through it the best we can."
Officials said they hope that more lawyers will volunteer and that the program will expand to include to those who earn more than $55,000 a year.