S.C. lax on combating rising rate of foreclosures

By James Rosen - James Rosen

WASHINGTON -- South Carolinians in danger of losing their homes are getting little help from the state government in combating one of the nation's fastest-growing foreclosure rates.

Congress moved Friday to help struggling homeowners across the country. The Senate voted 63-5 to pass a housing relief bill authorizing the Federal Housing Authority to back $300 billion in affordable mortgages.

The measure also would partially reimburse lenders for losses on mortgages with lowered interest rates and other modifications aimed at keeping people in their homes.

U.S. Sen. Jim DeMint, a Greenville Republican, had blocked the legislation because he believes it rewards the writing of risky mortgages.

"This bill bails out mortgage lenders that made bad loans and forces Americans to shoulder $300 billion in new risk," DeMint said.

DeMint didn't vote on the measure, aides said, because he attended a family wedding. Republican Sens. Lindsey Graham of South Carolina, and Richard Burr and Elizabeth Dole of North Carolina voted for it.

President Bush has threatened to veto the bill. There would likely be enough Senate votes to overturn his veto, but the House vote could be close.

In recent months, the national foreclosure crisis has reached South Carolina.

There were 1,063 foreclosures in South Carolina last month, for a rate of 1 per every 1,859 homes in the state, according to RealtyTrac, an Irvine, Calif.,-based firm that sells default data to mortgage lenders and investors.

The South Carolina default rate was 168 percent higher than a year earlier, in June 2007. Only Vermont, Wyoming and the District of Columbia had larger rate increases over the same time period.

Nationwide, there were more than a quarter-million foreclosures last month. The foreclosure rate of one per every 501 homes was up 53 percent from a year ago.

Lexington County has the highest foreclosure rate in South Carolina, with one in 468 homeowners facing default-- almost triple the rate in June 2007.

"The banks are saying there's not a big foreclosure problem in South Carolina, but we're seeing a lot of cases," said Sue Berkowitz, head of the SC Appleseed Legal Justice Center in Columbia. "It's not just a trickle. It's a steady flow."

Berkowitz and consumer advocates outside the state said S.C. Attorney General Henry McMaster has failed to prosecute predatory lenders and use existing laws to protect homeowners facing unfair foreclosures.

Only four attorneys general -- from Alabama, Louisiana, Nebraska and North Dakota -- rank lower than McMaster in a trying to aid residents at risk of losing their homes, according to a new report by the Association of Community Organizations for Reform Now, or ACORN, a nonprofit group headquartered in New Orleans.

"States with high or increasing foreclosure rates have attorneys general who are turning to this crisis and starting to put the resources of their office behind homeowners in this fight," said Austin King, ACORN national finance director.

Mark Plowden, McMaster's spokesman, vehemently denied that his boss has been slow to help threatened homeowners.

McMaster recently helped the S.C. Department of Consumer Affairs set up a toll-free hotline to report mortgage fraud -- 1-800-553-7723 -- and he testified to the S.C. Senate in 2003 to support a major overhaul of regulations on lenders, Plowden said.

McMaster successfully won a court challenge to a state law requiring a lawyer to be present at every mortgage closing, Plowden said.

"We don't have a big foreclosure problem in South Carolina because we're not one of the places where there was an unreasonable spike in home prices," Plowden said. "But we do believe that the state law protects South Carolinians from unfair practices in the mortgage arena."

Virginia Edmonds, a mental health aide in Columbia, might not share that view.

The mother of three grown children has waged a 10-month fight to keep the Haverford Drive home her late father bought in 1993.

With her take-home pay of $567 a month - up to $679 if she works overtime -- paying the mortgage has always been tough. But it got even harder as several lenders steadily raised her loan's interest rate.

Finally, Countrywide Financial wrote Edmonds last September to say it was starting foreclosure proceedings. By then, she was paying $832 a month, with a rate of nearly 11.25 percent.

"The payments went up on my house, but my paycheck didn't move too far up," Edmonds said. "I was balancing paying the mortgage and buying groceries. It put me in a bind."

Edmonds, who had gallbladder surgery in April, said she called dozens of churches, charities and local and state agencies seeking help.

Workers at the S.C. Department of Social Services told her they could help with utilities and food, but not mortgages. They didn't refer her to McMaster's office, or to the Department of Consumer Affairs.

"I called so many people because I was so upset," Emonds said. "I was doing whatever it took to try to save my home."

Finally a friend's tip led her to ACORN. Their lawyers have negotiated a pending deal with Countrywide, Edmonds said, that will reduce her monthly payment to $521 with a 5 percent interest rate.

Attorneys general in other states are pooling their resources and reaching similar agreements with major lenders on behalf of thousands of homeowners at a stroke.

Berkowitz credited McMaster with helping to persuade the General Assembly to pass the High Cost and Consumer Loan Act of 2003.

But she said McMaster and his staff lawyers haven't brought any lawsuits against mortgage lenders under relevant provisions of that law, the Unfair Trade Practices Act or other legal means at his disposal.

"It's a shame they have not used these laws to protect mortgage-holders and other consumers," Berkowitz said. "If they brought a few lawsuits -- boy, would that have a ripple effect. I would love to see our attorney general become more assertive on this issue."