By Pam O’Dell,
Two Studies confirm what now appears obvious: The Georgia General Assembly did very little to prevent or address the residential foreclosure crises.
Acts of Omission: The Immergluck Study
In 2011, researchers Dan Immergluck of the School of Regional Planning at the Georgia Institute of Technology, and Frank Alexander, Urban Housing Expert within Emory’s School of Law, co-published research entitled: Legislative Responses to the Foreclosure Crises in Non-Judicial States.
The study reveals that Georgia ranked high in the number of foreclosures, but ranked low in its response to the foreclosure crises.
During a phone interview, Alexander deemed Georgia’s failure to address the crises as an “unfortunate loss of opportunity to halt the economic destruction of huge portions of the state.”
Alexander gave credit to some legislators who persistently put forth “reasonable bills to stop the bleeding” but noted that House and Senate leadership did not assist in their passage.
Legislative records show that although numerous bills were filed in order to address the crises, almost all failed to pass the Georgia House and Senate.
One exception was SB531, which made modest changes to recording and filing requirements and extended the foreclosure period from fifteen to thirty days. (Georgia has one of the shortest foreclosure process periods in the nation-often taking less than forty-five days from start to finish).
Acts of Commission: The National Neighborhood Indicators Project Study and the Evisceration of the Georgia Fair Lending Act
In May of 2009, the Urban Institute initiated a project in which stakeholders were quickly convened to address Atlanta’s foreclosure crises. The National Neighborhood Indicators Project hired a group of Atlanta-based researchers prior to the intervention to study the crises.
The end product was a study entitled: Addressing The Foreclosure Crises: Action-Oriented Research in Metropolitan Atlanta. The study cites the single most damaging changes in statue which contributed to the severity and duration of the foreclosure crises: 2003 amendments to The Georgia Fair Lending Act.
“In terms of lending regulation, there are few borrower protections in Georgia. In 2002, Georgia passed one of the toughest anti-predatory lending laws in the country. However, financial industry lobbyists and credit rating agencies, and a change in gubernatorial administrations (from Democrat to Republican), led to overturning and weakening the law,” the study stated.
By 2002, subprime mortgages in Georgia topped $7.1 billion.
Senator Vincent Fort D-Atlanta drafted legislation that made banks legally accountable for what had become known as ‘predatory’ lending practices.
The bill was publically championed by Governor Barnes who was instantly besieged by mortgage industry lobbyists. Barnes held strong amidst threats that the industry would essentially boycott the state. The Act was signed on April 23, 2002.
Barnes was targeted for defeat by subprime mortgage lenders and credit rating agencies. After Barnes’ defeat, the General Assembly quickly amended the Fair Lending Act.
An account of the development (and subsequent destruction of) the Georgia Fair Lending Act is documented in a PBS Frontline documentary entitled: “Money, Power, and Wall street.”
During a phone interview, Barnes referred to the act as “the most difficult bill I’ve ever worked on.” Barnes said he spent “every day and every night” calling legislators to “address their fears and encourage them to do the right thing.”
“One purpose of government is to use its political and economic power to protect good, hard-working people that make this country work. We knew these Wall Street bankers were bad, but we didn’t know they would bring the entire world to its knees, we just wanted to protect homeowners from deceit and robbery.”
Barnes warned that: “If something is not done to restore protections, the next bubble will be concentrated in Georgia.” He suggested that lawmakers responsible for stripping the law of its protections “look at themselves in the face and say: I caused that, I decided to give into the special interests. They should then resolve to restore basic protections within the law.”
The Georgia Supreme Court’s Innuendo Regarding A Lack of Consumer Protections Within Statue
In May of this year, the Georgia Supreme Court ruled in favor of lending institutions on an issue involving loan documentation. The court found nothing in Georgia Law to protect citizens from improper foreclosure. The court then delivered this polite rebuke:
“(T)he continued ease with which foreclosures may proceed in this State gives us pause, in light of the grave consequences foreclosures pose for individuals, families, neighborhoods, and society in general,” the court said. But the decision said the court’s concerns “do not entitle us to overstep our judicial role, and thus we leave to the members of our legislature, if they are so inclined, the task of undertaking additional reform.”
[O’Dell provides news on state government through, The O’Dell Report in newspapers in North Georgia and her blog, odellreport.com.