Friday, March 30, 2012

State lawmakers pass legal-notice bill

Foreclosure trustees can’t publish in self-owned paper

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The Legislature voted this week to prevent foreclosure trustees from buying small newspapers in order to run the trustees' notices of foreclosure sales.

Publishers have slammed this type of business integration, saying trustees are undermining journalistic integrity, but the Newspaper Association of Idaho lobbied for the bill—House Bill 624—for a different reason.

"The real concern is a [newspaper's] policy of public notice," said Jeremy Pisca, spokesman for the Newspaper Association of Idaho. "With regard to a home foreclosure, the idea is that someone's house is going to be foreclosed on and sold in a public bidding process. It's in the homeowner's interest that notice is sent to the most people."

That's because the larger the newspaper's circulation, the more the number of potential bidders who may see it, possibly driving up the foreclosed home's price and reliving more of the homeowner's debt. But Pisca said the trustee firms are mostly buying small papers.

Idaho Code requires that legal notice of a foreclosure must be published in "a newspaper of general circulation ... for four (4) consecutive weeks." State law sets the fees for the notices but does not address whether they run in papers of large or small circulation. Legal notices provide a revenue source to papers, as the ads can run up to $1,000 for four weeks.

"From a business model standpoint, it wouldn't make sense to purchase large papers with a lot of capital investment," Pisca said. "You can see the economies of scale there."

The legislation arose earlier this year, just after Northwest Trustee Services Inc., a foreclosure services company in Bellevue, Wash., bought the 2,100-circulation Kuna-Melba News near Boise.

The Idaho Statesman, also based in Ada County, has an average daily circulation of 61,000 papers—meaning that legal notices in the Kuna-Melba news would only get a fraction of the readership of one in a larger newspaper in the same county.

"It's a breach of public notice," Pisca said.

Northwest Trustee Services has been buying newspapers in other states as well, including Oregon. Publisher Jeb Bladine of the McMinnville News-Register in Oregon said that companies such as that one have no business being in journalism.

"Newspapers have always been for-profit businesses, but they were making money by being good newspapers and serving their communities," Bladine told the Portland Oregonian in January. "This is something different altogether. It's a bastardization of the traditions of community journalism."

Northwest Trustee Services CEO Stephen Routh told the Oregonian that his motives were purely business-related.

"I don't claim to be a journalist," he said. "I'm a businessman. It makes sense to control the process."

The company won't be able to control that process in Idaho. While nothing prevents a foreclosure trustee from buying a newspaper, the company would be prevented from running its own legal notices in any paper in which it has a financial interest.

Katherine Wutz: kwutz@mtexpress.com

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