Members of the Tennessee General Assembly will consider the legislation in committee Tuesday.
House Bill 1920 will come before the House Judiciary Committee at 10:30 a.m. and companion Senate Bill 1299 will be considered before the Senate Judiciary Committee later that afternoon.
State Rep. Eric Watson, R-Cleveland, who represents the 22nd Legislative District, chairs the House Judiciary Committee. State Sen. Mike Bell, R-Riceville, who represents the 9th Senatorial District including Bradley, McMinn, Meigs and Polk counties, is a member and secretary of the Senate Judiciary Committee.
We urge Rep. Watson and Sen. Bell to vote against the proposal for a number of reasons, the most critical of which is its continued dilution of consumer protection among Tennessee residents whose state already ranks in the bottom third nationally for published notice requirements, and finds itself in the bottom five nationwide in judicial oversight of bank activities regarding foreclosure.
The misguided legislation, whose wording and intent circumvent basic American freedoms like the people’s right to know and due process, is being solicited by the Tennessee Bankers Association.
The lobbyist’s support of the companion bills is likely based on two premises. One, reducing the number of required published notices would cut operating costs for financial institutions. And two, only one required printed notice in a newspaper of general circulation would shorten the cycle for foreclosure proceedings and allow banks and other related lending institutions to move quickly in taking the homes of consumers who have fallen behind in their mortgages.
As proposed, the legislation would greatly benefit banks and financial institutions.
And that is its flaw because it likewise strips homeowners of their consumer protection rights.
Consider these points:
n In Tennessee, the requirement of three published foreclosure notices has been state law for decades. Nothing has changed in that time to warrant such an unprecedented act.
n Publication of these notices not only protects the consumers — homeowners — but also banks and other lenders who face potential litigation if it is determined they have violated basic American rights or committed procedural or clerical errors, unintended or otherwise.
n Three published foreclosure notices, the minimal requirement in Tennessee, already gives our state the embarrassing distinction of being among the third lowest nationwide. Reducing this requirement to only one would place the Volunteer State dead last, further jeopardizing consumer protection.
n Existing state law does not even require full legal descriptions within foreclosure notices. This in itself is bad enough because it opens the door for foreclosures to be challenged in court; in most states, attorneys and title companies support the publication of these legal descriptions. As written, the proposed Tennessee bill would actually go as far as to prohibit the publication of legal descriptions within foreclosure notices.
n Already ranked in the bottom five nationally regarding judicial oversight of bank activities involving foreclosure, such an action would compound Tennessee’s problems — and our sense of embarrassment — even further. With no state-mandated judicial oversight of financial institutions, property owners would have only one recourse for slowing a foreclosure — bankruptcy. Do we really need more bankruptcies in this state?
Some might ask, “Is this also a revenue issue for newspapers?”
Of course it is, one that would impact smaller publications far more than their larger counterparts.
This could potentially mean the demise of more small businesses.
And in Tennessee, it could mean even more bankruptcies.
So again we ask, is this what we want for our state?
House Bill 1920 and Senate Bill 1299 are simply bad ideas and erode basic American rights.