Loan Servicers Reject Governor's Original Proposed Compact

November 8, 2007

Return to Predatory Lending: Developments and Pending Litigation

On Thursday, November 8, 2007, Ohio Governor Ted Strickland, Ohio Attorney General Marc Dann, Ohio Supreme Court Chief Justice Thomas Moyer, and Ohio Department of Commerce Director Kimberly Zurz held a press conference announcing significant new actions designed to prevent additional home foreclosures in Ohio.

Governor Strickland had previously proposed a Compact between Ohio and the lending industry as a way to address foreclosure issues. The Compact was the key result of the Foreclosure Prevention Task Force created earlier this year by Governor Strickland as a follow up to the recent enactment of Senate Bill 185 - the Ohio Homebuyers' Protection Act.

At the press conference, Governor Strickland announced that the mortgage lending industry had not signed onto his proposed Compact. The industry earlier provided its own proposal, similar to the proposal of U.S. Senator Christopher Dodd (the "Dodd Principles"), detailing industry methods for working through foreclosure issues in Ohio. Governor Strickland dismissed the industry proposal as "an inadequate response." The Governor provided a comparison document detailing the differences between the Governor's Compact and the industry alternative.

The Governor also expressed disappointment that the State and the industry failed to agree on the Compact. The Governor concluded that his office had not closed the door on diplomacy, but the State was disappointed and loan servicers needed to take specific, measurable, and actionable steps to address the problem.