NCLC - Foreclosure Mediation Can Save Millions of Homes and Taxpayer Money

National Consumer Law Center Report Urges All States to Quickly Adopt Strong Programs 

Download a PDF of the full report, executive summary, tables and related online content at:
http://www.nclc.org/foreclosures-and-mortgages/rebuilding-america.html

BOSTON, Mass.─Looking for a fix to help the broken housing market? There’s already a proven inexpensive solution that can help head off the predicted 10 million homes in the United States that will be lost to foreclosure over the next several years. A new report from the National Consumer Law Center (NCLC), Rebuilding America: How States Can Save Millions of Homes Through Foreclosure Mediation, documents how states with strong programs are preventing foreclosures while saving money for investors and taxpayers.

This nationwide report reviews existing programs in 19 states and makes recommendations for best practices for all states to adopt, using foreclosure mediation data from the last three years to draw its conclusions. The report includes examples of programs that are more successful (Connecticut, Nevada, and New York) and those that are less so; state references per section; tables; and a history, including statistics, of documented servicer problems and the Home Affordable Modification Program (HAMP).

“Evidence shows that effective foreclosure mediation can keep paying borrowers in their homes for the long term while also saving billions of dollars for taxpayers and investors,” said Geoff Walsh, an attorney at National Consumer Law and author of the report. “Our report reviews programs in use in 19 states and makes recommendations for best practices drawn from that analysis. The evidence is in that mediation programs can be financially self-sustaining, do not prolong inevitable foreclosures, and are a proven tool that can help rebuild the fragile U.S. economy. If all states adopted strong foreclosure mediation programs, it would prevent further harm to millions of families while also saving local communities and investors billions of dollars.”

Highlights and key recommendations from the report include:

·         Foreclosure mediation programs and conferences provide substantial community benefits at little or no cost. Mediation fees average from none to less than $1,000, typically paid by the homeowner and/or the mortgage lender. In comparison, investors lost an average $145,000 per home foreclosure in 2008, and foreclosures just in California have resulted in nearly $500 billion in aggregate direct and indirect costs.

·         Effective mediation programs do not prolong foreclosures. Most mediation programs work within the time frames for existing state laws. In Philadelphia, for example, the typical foreclosure case spent 53 days in a foreclosure conference while the average time frame to complete an uncontested foreclosure was 10 months.

·         Foreclosure mediation programs connect borrowers with housing counselors. Borrowers who receive housing counseling are much more likely to avoid foreclosure, and obtain affordable as well as sustainable loan modifications. According to a recent study, 63% of borrowers who obtained modifications with counseling sustained the modifications, while only 8%of borrowers who obtained modifications without counseling sustained them.

·         Not all foreclosure mediation programs are equal; all states should adopt foreclosure mediation programs with enforceable standards and robust outreach as permanent features of state foreclosure laws as quickly as possible. Florida’s mediation program lacked enforceable standards, did not compel servicers to negotiate in good faith, and had an ineffective outreach component, so many homeowners were unaware of it. The state recently suspended the program due to lack of participation. By contrast, New York and Connecticut programs are reaping more success:
During each of the years 2010 and 2011, New York courts conducted over 80,000 conferences in foreclosure cases. Before the courts implemented this foreclosure conference system, homeowners did not participate at all in about 90% of the foreclosure cases, Now, homeowners appear for conferences to discuss settlement options with their lenders in 90% of the cases, a complete reversal of the prior dynamic. In certain locations, such as Staten Island, more than half of homeowners who come to the conferences appear with attorneys. When lenders do not abide by conference rules, New York courts impose sanctions, such as tolling of interest and barring foreclosures. In Staten Island, a third of the homeowners who complete the conferences obtain loan modifications. Connecticut, has a similar program and more than 50% of homeowners who complete mediations end up with a permanent loan modification.

·         Strong foreclosure mediation programs can work hand-in-hand with other tools to rebuild the nation’s broken mortgage market and should be used to maximize HAMP modifications. As documented in previous NCLC reports, servicers can make sustainable loan modifications yet many choose not to do so. The modified loans’ default rate over one year dropped from 56.2% in 2008 to 25.7% in 2010. HAMP loan modifications were the most sustainable of all with a 19.4% (2010) and 17.3% (2011) redefault rate after one year.

·         Policymakers can use mediation programs to help preserve minority homeownership; gains made over the last decade are vanishing. Black and Latino homeowners face a doubly high foreclosure rate, even when adjusted for income. Many minority families were initially targeted for unaffordable subprime loans, and are denied loan modifications more often and steered into less affordable non-HAMP loan modifications more frequently than non-minority homeowners. Mediation programs provide needed oversight over practices that continue to disproportionately impact minorities.

·         Borrowers in mediation must receive accurate information about an increasingly unaffordable rental market. Renters, especially those who are low-income, are more than twice as likely as homeowners to spend more than 50 percent of income for housing. Mediation programs should refer all homeowners to housing counselors to evaluate the costs of renting before giving up on saving a  home.

Rebuilding America: How States Can Save Millions of Homes through Foreclosure Mediation is the National Consumer Law Center’s fourth annual report on foreclosure mediation and builds on NCLC’s extensive body of foreclosure prevention work at http://www.nclc.org/issues/foreclosures-and-mortgages.html.

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The National Consumer Law Center^® (NCLC^®) is a non-profit organization specializing in consumer issues on behalf of low-income and other vulnerable people. Since 1969, NCLC has worked with legal services and nonprofit organizations as well as government and private attorneys across the United States, to create sound public policy for low-income and elderly individuals on consumer issues.

DNC - Which Mitt Romney Is Talking About Foreclosures Today?

Today, the Romney campaign released a web video in part trying to express concern over the housing crisis. This Mitt Romney is quite different than the Mitt Romney of last week who said we should not “try to stop the foreclosure process. Let it runs its course and hit the bottom” and let investors buy homes and turn a profit while homeowners are literally left out in the cold. In response to the Romney attack, DNC Communications Director Brad Woodhouse released the following statement:

“Mitt Romney of this week let me introduce you to the Mitt Romney of last week – the Mitt Romney who callously took the position that homeowners who have been cheated, scammed or simply lost value in their homes as a result of Wall Street’s risky bets should be allowed to ‘hit rock bottom.’  Romney’s position is appalling, but not unexpected from a former financial executive who wants to let Wall Street – the same guys whose recklessness crashed the housing market and our economy – write its own rules, even if it means hanging the middle-class out to dry.  It is irresponsible, but not surprising coming from someone who made a fortune firing workers and sending their jobs overseas.  And what else can we expect from someone who said that ‘corporations are people’ or called tax relief of $1,500 for a typical middle class family ‘little Band Aids.’

“While President Obama is fighting to create jobs and adopt policies that give underwater homeowners a chance to refinance and stay in their homes, Mitt Romney believes families who work hard and play by the rules should be kicked out of their homes so bankers can get rich.  Mitt Romney’s vision of the American Dream would be a nightmare for America’s homeowners.”

See the Romney housing plan here http://bit.ly/r8JpRF

Romney: “Don’t Try To Stop The Foreclosure Process. Let It Run Its Course And Hit The Bottom.” Romney: “As to what to do for the housing industry specifically and are their things that you can do to encourage housing. One is, don’t try to stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up. The Obama administration has slow walked the foreclosure process [inaudible] that has long existed and as a result we still have a foreclosure overhang.” [Las Vegas Review-Journal, 10/17/11]

ALG - Foreclosures Rise in Third Quarter, Slump Continues

Oct. 13, 2011, Fairfax, VA—Americans for Limited Government President Bill Wilson today issued the following statement on the increase in foreclosure filings in the third quarter to nearly 196,000:

"The truth is the rise in foreclosure filings is not surprising.  These foreclosures would have already cleared had the government moratoria and foreclosure 'prevention' schemes at the federal, state and local level never been implemented.  All they accomplished is slowing down the process and prolonging the housing downturn by almost a year, and thus the recession.  In the meantime, they prevented younger homebuyers from entering the market, forestalling a recovery.  Government needs to get out of the way once and for all and allow this process to work itself out."

CEI Daily - Foreclosures, Potatoes, and Net Neutrality

Foreclosures

ProPublica is reigniting public indignation over the foreclosure paperwork "scandal."

Senior Counsel Hans Bader explains why paperwork errors should not be the focal point of public discourse about mortgage foreclosures.

"Dismissing foreclosure actions based on technicalities that have nothing to do with whether a borrower defaulted on a loan will lead to negative 'consequences' for borrowers in the future, like much more costly handling of paperwork, that will likely lead to increased closing costs for people purchasing a home.  'Total war over missing paperwork' is a bad thing for honest borrowers and lenders alike."

Potatoes Chris Voigt lost 21 pounds and improved his health on an all-potato diet. Senior Counsel Hans Bader argues that the Obama administration's "war on potatoes" is unwarranted. "Potatoes are more nutritious than other starchy foods like rice and bread, and 'are a good source of vitamins.'  They have a lot of vitamin C (much more than a banana or an apple), and potassium levels slightly higher than potassium-rich bananas). But the Obama Administration, which does not understand nutrition, has banned white potatoes from the WIC program (for school lunches and poor mothers), based on the false belief that potatoes are unhealthy.  (Yet critics of the Obama Administration’s food nannyism get lectures from liberal journalists)."

Net Neutrality

"A Guide to the Open Internet" seeks to generate support for net neutrality.

Director of Technology Studies Wayne Crews says that net neutrality advocates have misjudged the telecommunications market.

"The FCC’s proposed net neutrality rules rest on the fallacy that government action is needed to ensure a vibrant, innovative Internet. In reality, today’s Internet is as free and innovative as ever, while consumer choice among broadband providers is at an all time high. Even the 'limited' net neutrality rules set to be announced tomorrow would empower a heavily politicized federal agency to dictate the outcomes of otherwise-private disputes over network access and pricing."



CEI Daily - Foreign Money, Foreclosures, and French Pensions

Foreign Money

President Obama has criticized the Chamber of Commerce for relying on foreign funding.

Fellow in Regulatory Studies Ryan Young says Obama's criticism is weak.

"President Obama seems to be saying that people are smart enough to know whether or not a candidate or a political party is bamboozling them in their campaign ads. But people suddenly lose their wits when an outside group, or — gasp! — someone from another country does the exact same thing. That kind of cognitive dissonance must be difficult to live with."

Foreclosures The media is having a field day over paperwork errors in mortgage foreclosures. Senior Counsel Hans Bader argues that the media is focusing on technicalities to avoid holding borrowers accountable. "Dismissing foreclosure actions based on technicalities that have nothing to do with whether a borrower defaulted on a loan will lead to negative 'consequences' for borrowers in the future, like much more costly handling of paperwork, that will likely lead to increased closing costs for people purchasing a home.  'Total war over missing paperwork' is a bad thing for honest borrowers and lenders alike."

French Pensions

France is having trouble sustaining its expensive employee benefits system.

Research Associate Lee Doren explains why the situation in France is dire.

"Nicholas Sarkozy has attempted to solve [France's financial problems] by raising the standard pension age from 60 to 62 and the age of a guaranteed 'full' pension from 65 to 67. This 'extreme' measure has led to French unions striking and shutting down the French economy. Yes, that’s correct. Asking people to work two more years in France in order to prevent the country from bankrupting itself is worthy of a strike."