16 Feb Wisconsin State Assembly Considers Mortgage Reform – A Call for Mandatory Mediation
On February 11, 2009, theWisconsin State Assembly Committee on Financial Institutionsheld a hearing on mortgage reform. The video of my testimony can be found here at the 1:00 mark.
Wisconsin should require lenders to mediate mortgages in default. Wisconsin has a long history of mediation in its courts. Getting lenders to negotiate is critical. Too frequently, mortgages are handled by servicers who have won’t negotiate modification agreements.
Do moratoriums on foreclosures help? I don’t think so. Moratoria are like tourniquets. They stop the bleeding but immediate treatment is still needed to save the patient. Moratoria would stop foreclosures. But solutions to encourage loan modifications are needed and now
The owners of the mortgages are remote “securitized trusts” – and they don’t have the ability to negotiate because nobody really speaks for them. The “servicers” who are supposed to represent their interest all too often represent only their own interests.
States are looking for solutions at their level. We are all awaiting President Obama’s mortgage foreclosure package on Wednesday. We hope that he will vigorously support mortgage modification legislation in Congress – HR 200 in the House of Representatives and S 61 in the Senate. We hope he will introduce other new ideas as well, particularly incentives for servicers to negotiate modification agreements instead of pushing foreclosure as the sole remedy.
In the meantime, Wisconsin should adopt legislation like that proposed in Massachusetts which would prohibit a lender from filing a foreclosure complaint until it certifies that it has made a good faith, commercially reasonable effort to enter into a loan modification agreement with the borrower.
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