by Florida has one of the highest mortgage foreclosure rates in the United States so it is perhaps fitting that Fannie Mae is testing a new plan designed to help homeowners in the sunshine state avoid foreclosures. Under the plan, bankers are required to meet borrowers within four months of the borrower falling behind. A trained mediator helps the party explore whether a loan modification might be a better solution.
The program is only available in 6 counties and only for mortgages guaranteed or backed by Fannie Mae. Still, according to published reports 1800 foreclosures have been referred to the program. Unfortunately, only a handful of cases have been settled suggesting a success rate of just a few percent.
The program is unique in that forces lenders to meet with borrowers before commencing a foreclosure action. A handful of jurisdictions have tried mediation programs that kicked in after a foreclosure action was filed. In most instances, the borrower is so far behind by that point that settlement is unlikely.
Freddie Mac plans a similar program. Unless the success rate increases, it is doubtful if the programs will last. Courts have the authority to order mediation but they can’t force a lender to offer a loan modification. Unless there is more of an incentive, banks are likely to simply show up for the mediation but offer nothing.
Until the courts routinely start dismissing complaints for poor documentation or the mortgage backers begin offering better modification programs, the banks will not perceive any risk and will have little incentive to help homeowners. RIsk of losing is what banks fear. Thus far, only a handful of courts have completely dismissed foreclosure complaints. The recent dismissal of two foreclosures against U.S. Bank and Wells Fargo by the Massachusetts Supreme Judicial Court is a notable exception.
If you are facing foreclosure, contact a lawyer as early as possible. It is often possible to modify a loan if is still early in the process. The longer no payments have been made, however, the less likely modification. A qualified foreclosure defense attorney can also review your documentation and determine if you have a valid defense. Given the problems with “robosigners” and missing loan documents, such a defense is not that farfetched. If nothing else, a good lawyer can often help you buy time so that you can save for a new home or make other living arrangements.
Mahany Law is a national boutique law firm concentrating in large commercial lender liability cases. We represent property owners, never banks or mortgage companies. For information about our lender liability practice, visit our sister lender liability site. We regret that we do not handle residential matters. No exceptions. If you are facing foreclosure or need help with a loan modification and can’t find a lawyer, contact your state or county bar association. Most have a no fee lawyer referral service that will help you find someone qualified.
If you believe you qualify for our services and have a commercial banking dispute, contact us online. All inquiries kept confidential.