MFI News

Providence Council OKs fine for disregarding foreclosure law

Philip Marcelo, Providence Journal
PROVIDENCE — The City Council has approved a $2,000 fine for banks or lenders that fail to follow the city’s new foreclosure ordinance, which requires that lenders attempt to renegotiate mortgages with homeowners before filing a deed of foreclosure with the city.

The fine was among a number of amendments that received final approval from the council Thursday. The amendments were proposed by Mayor David N. Cicilline’s administration and are expected to be signed by the mayor later this month.

The new language introduces substantive changes to an ordinance put into effect in September to slow the tide of foreclosures.

The first local law of its kind in the state, it encourages lenders to try to modify a mortgage so that a homeowner can remain in his or her home. A similar one has since been adopted by the City of Cranston.

According to Cicilline, the amendments were requested to address problems noted since the rollout of the new mandates.

As it is written, the “foreclosure mediation ordinance” requires a meeting between lenders and homeowners prior to foreclosure.

Any lender failing to comply with the requirements would not be able to have a deed of ownership recorded by the city Recorder of Deeds, a step necessary to complete the foreclosure process.

But the city has found that failure to comply with the ordinance can lead to breaking the chain of title, which affects the value of the property and creates problems for the purchaser. (Read more)