subprime mortgage crisis Tag

08 Oct Foreclosure Mediation is Dismal Failure

On July 1st, Connecticut enacted a Foreclosure Mediation Program to give homeowners a chance to negotiate resolution of their mortgage delinquency without being put out of their homes. In the three months that the program has been active, Connecticut mediators has successfully resolved about 150 cases with a revised payment plan. The dirty little secret? - that was only 3% of the cases set for mediation and a even smaller and minute number of the total foreclosures filed in that three month period.

Why is the program failing? For one, the program is new and not well-known despite attempts to put notices on the front of every foreclosure case that was filed after July 1, 2008. Second, there is only a short time to ask for the mediation and it does not apply to cases filed prior to July 1. Third, the program is not well-funded by the State of Connecticut and mediators have had only a short time to become trained in the process of foreclosures. Finally, the mediators have no power to enforce a re-structure of any mortgage and lenders have little incentive to make deals.

With the intervention of the federal government and merger of banking interests, the identity of the servicers and owners of the mortgages is constantly shifting.

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