AUSTIN -- Recent proposals by Texas Attorney General Greg Abbott to help alleviate a "looming crisis" in the state's housing market are unlikely to have much impact, according to a prominent property columnist.
Abbott released his "five measures" two weeks ago after meeting with leaders of the state's largest mortgage-leaning companies over increasingly high foreclosure rates in Texas, especially in the troubled sub-prime sector. The measures aim to staunch the foreclosure flow and stabilize borrowers' finances.
Although giving the attorney general "points for common sense" on the five measures, RealtyTimes columnist Peter G. Miller posted Oct. 23 that Abbott's efforts are likely to be futile. That's because he's the attorney general of Texas, not the United States.
"Many of the lenders he needs to talk with are regulated by the federal government," Miller wrote. "Under the concept of 'preemption' found in Article VI of the Constitution, federal law generally trumps any conflicting or contrary state law."
Amongst Abbott's five measures for lenders were making adjustable-rate mortgages easier to convert and reviewing foreclosure cases before sending them to collection. He also wants them to scrap some penalties and fees, set up customer-complaint groups and "improve communication with customers."
Miller quotes an earlier commentary pointing out that Abbott has no legal basis to enforce his measures on the state's mortgage lenders. Instead he reveals an essential weakness in the AGs' attempts to "protect" state home-owners from mortgage foreclosure.
"The real importance of Abbott's effort is that it exposes once again that the veil of regulation which supposedly protects American borrowers is nonexistent," Miller wrote. "Unless and until federal rules are changed, real borrower protection is not possible."
Texas foreclosures rose 22 percent year-on-year to over 14,000 in September, Miller pointed out.