A consumer group reports that anti-foreclosure efforts have largely been a bust. Are nearly two dozen foreclosure mediation programs across the U.S. – including those in such struggling states as Florida, Michigan and California – actually delivering on promises to help Americans avoid losing their homes? A new study by the National Consumer Law Center (NCLC) looks at the gap between the potential of these programs and the results achieved to date. The 25 distinct foreclosure mediation programs analyzed in the report are located in the following states: California, Connecticut, Florida, Indiana, Kentucky, Maine, Michigan, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon and Pennsylvania.
The report examines the weaknesses in existing foreclosure mediation programs, including a lack of significant obligations imposed on mortgage servicers, and contrasts them with other approaches, including existing voluntary mortgage modification programs and the alternative of Federal actions to direct servicers and mortgage holders to make affordable loan modifications. The report includes recommendations for a redirection of these programs through reforms that will make them more effective tools for controlling the foreclosure crisis
This isn’t terribly surprising. Tons of recent home buyers are so deeply underwater they’d rather cease making payments than throw good money after bad. Banks, not being charities, want homeowners to honor loan agreements. It’s hard to join hands when you’re running in opposite directions.