28 Nov Connecticut Foreclosure Mediation Program Not A Success
This week, Connecticut Governor Jodi Rell issued a press release touting the success of the foreclosure mediation program in the state. She claimed a 75% success rate in mediating foreclosure cases with 2721 cases where the homeowners retained their home. You know the saying, “There are lies, damn lies and then there arestatistics”? Well here is an example of skewing the numbers to cook the books.
The numbers cover the period of July 2008 to the end of October 2009. That is the period the mediation program has been in operation. In July 2009, mediation became mandatory in all residential foreclosures. During that time, only 4,448 cases were put into mediation, yet over 32,000 foreclosures were filed in the state. So to begin with, less than 14% of the cases were mediated at all.
If we define ‘success’ as the number of families that got to stay in their home versus the number of homes foreclosed, we can see that the 2721 loans modified is a success rate of only 8.5%, not 75%! Hardly a glowing endorsement.
This is not a criticism of the mediators who work hard to get recalcitrant lenders to the table. Unfortunately, they are mostly powerless to force the lenders to do anything but talk. They should be commended for accomplishing anything in the face of the volume of foreclosures and the difficulty of a declining market.
However to use the Governor’s methodology, 25% of homeowners in the program are still in limbo and 13.5% had to leave their home. Is this any way to stabilize a housing market? You bet it isn’t.