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In this Sunday Edition, a homeowner, an advocate and the deputy attorney general discuss a plan in the Utah Legislature to provide some recourse to homeowners who lose their homes in a wrongful foreclosure. Also, how will Utah fare when a big earthquake hits? Experts share insights on our preparedness.
Segment 1: Tackling wrongful foreclosures
More than 32,000 homes in Utah received a foreclosure notice last year. That's one in every 29 houses. It affects every neighborhood. A lot of those foreclosure notices went to people who thought they were meeting all of the lender's demands while following the procedures to apply for a loan modification.
Layton City Mayor Steve Curtis almost lost his home. Marco Fields, founder and executive director of TEEMS Utah, helps people like Curtis who are facing wrongful foreclosure. And Deputy Attorney General of Utah, John Swallow, has helped draft legislation to fine lenders that wrongfully foreclose.
The wrongful foreclosure statute that we are developing now in the legislature will require companies to follow that statute, that process, and make sure the rules are followed that are set forth in the statute. If they don't follow that process, if they break the rules, then there will be a penalty and attorney's fees to the homeowner that's the victim of a wrongful foreclosure.
Swallow has been working with Sen. Curt Bramble, R-Provo, on SB 261. This legislation will provide recourse for homeowners who suffer wrongful foreclosures. Utah currently has a foreclosure statute that lays out the process banks and lenders must use in order to foreclose, but currently the requirements of the statute are not being followed.
"The wrongful foreclosure statute that we are developing now in the legislature will require companies to follow that statute, that process, and make sure the rules are followed that are set forth in the statute. If they don't follow that process, if they break the rules, then there will be a penalty and attorney's fees to the homeowner that's the victim of a wrongful foreclosure," explains Swallow. "In the bill itself it defines a proper notice of default and a notice of sale. If a company does not follow the rules, the definitions that are set forth in statute, that is defined as a wrongful foreclosure. Again we are trying to give an incentive to companies that are foreclosing to follow the rules set forth in the statute and if they don't follow those rules, and there are victims that are created by that, then the victim will receive actual damages and if they don't correct it within a certain period of time they'll receive a penalty, as well as attorney's fees on top of the damages."
The bill passed in committee and is headed to the senate floor.
"We feel very strongly that it will help with the problem," Swallow says.
Fields says the SB 261 would have helped Curtis.
"If nothing else this is going to allow a Utah homeowner to retain an attorney to fight the process. And currently under the Utah foreclosure statute nowhere are there actual penalties so the banks are not currently following the statutes," Fields explains. "This is going to allow people to actually get the legal support they need."
"There are consequences, but as a practical matter a homeowner who doesn't have any resources to make a house payment really doesn't have the ability to hire a lawyer to pursue that in the courts. There are remedies, but we are going to enhance those penalties and fight for attorney's fees," he says. "We think that's a good idea and a good use of state resources and also really very good for the people."
Many banks are following the rules, but the goal of the legislation is to make sure all banks comply.
"I think there are many service organizations and banks in the state of Utah that are following the rules, but we want to make sure that every financial institution, when they are taking away someone's home, someone's property, the legacy that they have, they follow all the rules," explains Swallow.
If nothing else this is going to allow a Utah homeowner to retain an attorney to fight the process. This is going to allow people to actually get the legal support they need.
Curtis is speaking out to help others. He says the process has been terrifying to his wife and children.
"My neighborhood matters and I want to just help others better understand the predicament that they might find themselves in, how they can get out of it and where they can go from there," says Curtis.
To help Curtis, Fields reached out to the CEO of Bank of America and received a response. The process of getting the right paper work together did not change, but with senior management overseeing it Curtis' home was saved.
"It's unfortunate that it is who you know or who you can get to, but the reality is that Bank of America now has 50,000 full time employees just handling this crisis in their foreclosure division. It's a lot of employees and they get 100,000 phone calls a day, so unless you can get into those escalation processes it really is hard to go anything less than 8-9 months before you know what your final outcome is," Fields says.
Segment 2: Utah's earthquake threat
On Tuesday, Feb. 22, a 6.3 quake shook New Zealand's South Island -- causing massive damage in the island's largest city Christchurch.
More than 100 people died in the quake and the damage to modern buildings surprised many experts, who thought the city was better prepared.
We are very well prepared. Buildings that are designed to current building standards will indeed sustain the kind of earthquake that we expect along the Wasatch Front, but not without any damage. There's a misconception in the general public that buildings designed to code are earthquake proof. That's not the case, but they will stay standing up.
The buildings in Christchurch look a lot like buildings in Utah. Salt Lake and Christchurch were founded about the same time and share 160 years of construction techniques.
Dr. Kristine Pankow, assistant director of the University of Utah Seismograph Stations, and Mark Harris, a structural engineer with Reaveley Engineers & Associates, discuss the disaster in New Zealand and what a comparable earthquake in Utah might bring.
Pankow explains why people in New Zealand were surprised by the damage from this earthquake and how Utah is poised for a similar problem.
"Most of the damage was a function of how close the earthquake was to the town," explains Pankow. "This earthquake is a reminder that there's not just a big one possible. In New Zealand, they planned for the big one on the Alpine Fault, which is a large strike-slip fault like the San Andreas Fault in California. Both the magnitude 7 quake in September [in New Zealand] and this one were not on that fault. This was not the big one they were planning for. Utah has a similar story, there are other faults in Utah besides the Wasatch Fault that has the potential of generating magnitude 7 earthquakes or even this magnitude 5.5 or 6 could occur pretty much anywhere along the I-15 corridor."
Harris says the majority of the damage in New Zealand is from unreinforced masonry, or brick, buildings.
"You can see a lot of that kind of building in downtown Salt Lake City," explains Harris. "There are a number of owners who have tried to be proactive and tried to strengthen their buildings in preparation for this." He says the LDS Church has been very active in reinforcing historic buildings.
"We are very well prepared," Harris says. "Buildings that are designed to current building standards will indeed sustain the kind of earthquake that we expect along the Wasatch Front, but not without any damage. There's a misconception in the general public that buildings designed to code are earthquake proof. That's not the case, but they will stay standing up." He says anything built to code after the mid to late-1970s will sustain an earthquake.