Most would agree that the foreclosure mediation program launched in late 2009 had a laudable goal: to allow homeowners to avoid foreclosure through the loan modification process.
Unfortunately, this program never delivered as its supporters had hoped. And now, according to a recent feature story in the Bradenton Herald, the program is no more. The Florida Supreme Court in late December disbanded the mandatory program, citing its lack of success.
Under the program, mortgage lenders were required to contact homeowners who faced foreclosure. These lenders were to offer homeowners the chance to modify their loans by lowering interest rates, changing the terms of loans or forgiving a portion of homeowners’ principal loan balances to leave them with a lower monthly mortgage payment. The goal was to do anything to help lessen the number of housing foreclosures sweeping through Florida.
Unfortunately, the foreclosure mediation program experienced problems from its start. Lenders said they often struggled to reach homeowners who were nearing foreclosure. And often when they did reach them, the homeowners didn’t want to participate in the program and instead resolved to simply stop making their mortgage payments.
Attorneys and borrowers point the blame at mortgage lenders, saying that they weren’t willing to do enough to help struggling homeowners.
According to the Herald story, just 3.6 percent of the more than 78,000 statewide cases eligible for foreclosure mediation reached a settlement. These settlements could include a loan modification, short sale or deed-in-lieu-of foreclosure.
Florida’s failed program offers yet more evidence that the nation’s foreclosure problem can’t be solved with quick-fix solutions. Until the economy picks up and unemployment rates fall, expect to see the number of housing foreclosures in Florida and across the county soar.
Bradenton Herald: “Foreclosure mediation program falters,” Josh Salman, Dec. 21, 2011