State & Local Foreclosure Mediation Programs Can They Save Homes

Written By Geoffry Walsh Staff Attorney National Consumer Law Center,

Geoff Walsh has been a legal services attorney for over twenty-five years and is presently a staff attorney with National Consumer Law Center

The Promise of Foreclosure Mediation Programs

In the ongoing struggle to control the ravages of the foreclosure crisis, mediation programs have emerged as an increasingly attractive option. Many consumer advocates and community groups have supported the implementation of foreclosure mediation programs and continue to do so. In a little over a year, from mid-2008 to mid-2009, more than 25 distinct foreclosure me¬diation programs were launched in fourteen dif¬ferent states. State legislatures, state supreme courts, and local courts all played roles in creat¬ing these programs.

Foreclosure mediations hold out the hope of removing major obstacles that have hindered ef-forts to slow the spread of the foreclosure epi¬demic. In particular, the securitization of mortgage debt has erected significant barriers be-tween homeowners and the owners of their mort-gages. When homeowners want to negotiate over a loan modification or other alternative to fore-closure, they often cannot find a person author¬ized to negotiate with them. With homeowners cut off from effective negotiations, foreclosures move ahead and losses to investors mount with each completed foreclosure. Today, the rate at which loans are being modified remains ex¬tremely low in relation to the high numbers of ongoing foreclosures

Separating Facts from Fiction

In preparing this report we interviewed legal ser - vices attorneys, court officials, and other advo¬cates who have been working directly with the 25 foreclosure mediation programs we considered.

Our review raised concerns about the kind of ex-pectations that these programs may be encourag¬ing. For example, there is as yet no data to confirm that foreclosure mediation programs anywhere have led to a substantial number of af-fordable and sustainable l

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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