Justice Department Advocates Boosting Research, Funding For Foreclosure Mediation Programs

Suddenly all the government agencies are giving their two cents on foreclosure.

Foreclosure mediation, the process whereby homeowners negotiate with lenders so they need not lose their homes, is worthy of a boost in research and possibly federal funding, according to a new report from a Justice Department panel.

As millions of homes in the foreclosure pipeline weigh on home prices and the housing recovery, government officials have considered a variety of avenues to aid struggling homeowners, mostly to limited success. Federal Reserve Chairman Ben Bernanke advocated that lenders "aggressively" pursue loan modifications and other alternatives to foreclosure in a paper released last week.

The Home Affordable Modification Program, which Obama announced in February 2009, had helped roughly 750,000 homeowners as of November, though it was touted as a plan to aid 3 to 4 million.

Though foreclosure mediation is available in a number of states, the Justice Department report comes as some are ending their versions of the program due to concerns over its efficacy. A Florida Supreme Court Justice ended the state's mandatory foreclosure mediation program last year, after a task force of judges recommend that it be terminated due to its low success rate, The Miami Herald reports. In Maryland, just 56 borrowers got a modification through the program in the space of a year and only 1,000 borrowers had applied, according to Mother Jones.

A 2009 study from the National Consumer Law Center found that foreclosure mediation programs can often be ineffective because they produce agreements that lack any mechanism for enforcement. Though the Justice Department report doesn't include recommendations for giving the agreements teeth, it does offer recommendations that could give foreclosure mediation programs a bit more clout.

The panel suggested creating federal guidelines for the programs, which currently vary from state-to-state, also recommending the federal government match funding for state programs that meet those guidelines. In addition, the report urges that federally-backed loans go through mediation before foreclosure can take place.

In some states the programs have already been a success even without a federal boost. More than 10 percent of Nevada homeowners in danger of default had taken advantage of the state's mediation program within the first six months of its inception. And Michigan Governor Rick Snyder extended the state's foreclosure mediation program through this year, according to Housingwire.

Also on HuffPost:

Comments

[carolgregor]

07:47 PM on 01/12/2012

Stop foreclosure now to help homeowners modify, if you do not, millions will lose their homes. Help people first.

[Collapsing House Price]

01:14 PM on 01/11/2012

“"Sinking Values Prompting Homeowners to Consider Strategic Default as Best Business Decision"

http://art­icles.chic­agotribune­.com/2011-­05-22/news­/ct-biz-05­22-strateg­ic-default­s--2011052­2_1_strate­gic-defaul­t-joanne-g­askin-home­-values

Save yourself and the financial future of your children and WALK away from the inflated mortgage paymen. You'll never recover if you continue to make huge payments on a rapidly depreciati­ng house.

WALK AWAY from that inflated mortgage. WALK AWAY

[portfolio]

01:40 PM on 01/11/2012

Of all the strange users I have encountered on this blog I must say that you take the cake.

[Collapsing House Price]

01:44 PM on 01/11/2012

..... and he wheels out another username to discredit the truth.

Do you REALLY need multiple usernames?

[frank day]

02:32 PM on 01/11/2012

Hey friend,

Still winning people over with your charm, huh???

[Collapsing House Price]

02:56 PM on 01/11/2012

Hey FranksterTheBankster,

Why do you keep telling borrowers to continue paying on an inflated mortgage on a rapidly depreciating house when you know they'll never financially recover?

[Klarsonent]

12:44 PM on 01/11/2012

The main problem is that the banks really don't want to negotiate with the borrowers. Look at it from their perspective: If the borrower didn't put 20% down on the property to begin with, they have to pay PMI (private mortgage insurance). This covers the 20%. If the borrower walks away or just stops making payments and goes into foreclosure, the bank has the property as collateral to sell on the auction block. If they don't get a quick sale on the auction block, they can hold the property for sale at a later date. Who wins in this situation? The banks win. Plain and simple.

[Collapsing House Price]

01:01 PM on 01/11/2012

How do the banks win when they lent $200k on a house that's only worth $50k?

You real estate agents need to stop pandering and *THINK*

[frank day]

01:09 PM on 01/11/2012

A business that has assets does not "walk away". They are forced to sell those assets and pay their creditors. A person capable of paying their mortgage should do so. And there is every likelihood that they will eventually recover that value. You are IRRESPONSIBLE.

[Collapsing House Price]

01:12 PM on 01/11/2012

FranksterTheBankster,

A business DECIDES to default on debt. They aren't forced.

A person DECIDES to WALK AWAY from a grossly inflated mortgage on a rapidly depreciating house. The KNOW they will NEVER recover financially if they stay and pay.

YOU are a BANKSTER.

Why do you banksters want to keep people enslaved to to massive debt?

[frank day]

01:09 PM on 01/11/2012

Banks love it when people walk.

More money in their pockets.

[Collapsing House Price]

01:14 PM on 01/11/2012

Banks love it when people are enslaved to massive debt.

More money in their pockets.

[mater]

01:15 PM on 01/11/2012

Right again. And a very hard lesson to learn the hard way!

[MHT73]

10:48 AM on 01/11/2012

I'd like to know how they define success.

Mediation is great when the two sides are of relatively equal bargaining power. That can be two sides to a divorce (although not always), a merchant and supplier, and so on. It is usually NOT a bank (with enormous financial power) and a homeowner who's been unable to keep up. Gone are the days when the bank was a locally owned and run business staffed by people who'd known you since you were a kid.

We have seen many, many examples of banks that have abused their power by foreclosing on people who owe less than a dollar, or who've been billed double for property tax, or who paid AHEAD of the month due, and get hit for a non-payment in the month due - the list goes on and on. If mediation can get these banks to play fair and square, terrific, but I'm not holding my breath.

[frank day]

12:34 PM on 01/11/2012

Good post.

Mediation in this situation is inappropriate.

[mater]

12:38 PM on 01/11/2012

Contracts were signed by owners and bankers--done and done.

[Mailman]

08:53 AM on 01/11/2012

Just delaying the gunshot wound with a bandage.

[MHT73]

10:48 AM on 01/11/2012

my fear too,

[webnova]

08:43 AM on 01/11/2012

It would be simple if only they, the US Government, would follow the "Rule of Law". The Laws of Land Transaction have been fraudulently, and criminally destroyed through scrutinizing and turning notes into securities is beyond comprehension.
If it takes more then 30 minutes to find out who owns your mortgage note, then something is seriously wrong.
What is really sad is that most people paying on their mortgages don't even realize it or even care.

[MHT73]

10:52 AM on 01/11/2012

F&F. Mediation doesn't help a homeowner who doesn't know that the bank has broken the law.

I'm thoroughly opposed to the state AG's working out a 'deal' to settle these cases that lets the banks off the hook.

[dave5251]

07:55 AM on 01/11/2012

the ONLY way home will EVER stop fall is if EVERY ONE stop pay they cant take all the home back and this way every one win this way ever one will get a brake and in a heartbeat bank will work out lower payment for everyone 100% and bank will be happy to make a small profir better the no profit and there will be no more greed !!!!!!!!! and this can be done in a month time and the USA will be on the right track to be great again !!!!!!!!!! (fact )

[anastmosis]

12:25 AM on 01/11/2012

Do I understand correctly that the Justice Department charged with upholding the law and prosecuting law breakers is refusing to pursue lenders accused of wrongdoing and instead is pushing for banks and homebuyers to work out some sort of agreement between themselves? They have nothing to say about wrongdoing on the part of lenders, but have the nerve to propose spending more taxpayer money to study and pursue a course of action which has already been proven by sad experience to be a miserable failure?

[K August]

04:43 AM on 01/11/2012

They've all been forced to pay big fines but they haven't sent anyone to prison. Sad..

Until we figure out how to reverse the housing mess or clean it up.....the economy will struggle to recover. I think they should have forced these folks to do across the board interest cuts on mortgages as part of the agreement to bail them out.

[emanafunk]

09:40 PM on 01/10/2012

Where some keep underwater mortages, they are deemed suk rs .

[karen1p]

09:34 PM on 01/10/2012

The reason that all Federal agencies now want to promote mediation, is the tide is now turning....the banks will start getting their knees whacked in courtrooms.....so, let's deter homeowners from understanding the law.

[old broken record]

08:11 PM on 01/10/2012

let hope for the best

but so far smoke and mirrors and big disappointment as people lose their homes and home prices go down.

[portfolio]

01:45 PM on 01/11/2012

This has been a hard nut to crack.

[tampamurray]

06:52 PM on 01/10/2012

If they're going to start renegotiating interest rates and mortgage balances for the Americans who aren't paying their mortgages, then I want mine renegotiated as well. Unfortunately, because we can afford to make our payments, we were told that we don't qualify. So, the value of our home goes down because of all the people who walked away from their homes, but the only people getting any benefit are those who quit making payments. Great, people who do the right thing get penalized, while the people who didn't meet their obligations get a free ride. God Bless America.

[Siebenstein]

07:49 PM on 01/10/2012

You have absolutely no understanding on this issue at all !

[tampamurray]

07:52 PM on 01/10/2012

That's a pretty strong statement with no basis in fact. What is it you think I don't understand?

[Collapsing House Price]

07:52 PM on 01/10/2012

You're better off walking away from the house.

[tampamurray]

08:01 PM on 01/10/2012

Unfortunately, that's the exact mentality that got us into this mess. We bought the house and we'll pay for it. It's called personal responsibility. It used to be prevalent in this Country. Apparently no longer.