rssAs Congress Dithers, ACORN Urges Action on Ideas That Work
Thursday, April 30, 2009 at 9:34 am
- 7 Comments
With the Senate not exactly in a rush to pass a mortgage cramdown bill, the Association of Community Organizers for Reform Now (ACORN) is out with a report that cites a highly successful foreclosure prevention program that could be replicated elsewhere, with enough government support.
Since banks apparently call the shots in Capitol Hill, it’s refreshing to hear that someone is serious about trying to tackle the housing crisis.
ACORN points to a Philadelphia foreclosure mediation program that TWI has written about previously. It requires borrowers and servicers to sit down together before a foreclosure takes place, to see if both sides can work something out as an alternative to giving a home back to the bank. And in many cases, it works. That’s all the more reason why the Obama administration should put more federal resources into pre-foreclosure mediation efforts nationwide, based on the Philadelphia model, according to ACORN’s report.
Philadelphia has pioneered an innovative and remarkably effective foreclosure prevention program that requires lenders to sit down with borrowers and negotiate a mutually agreeable solution whenever possible. Approaching the one-year mark of the program’s initiation, more than three out of four homeowners who have entered the program remain in their homes today, where in other jurisdictions they would have lost their homes. The Philadelphia program is so effective because it is mandatory, uses very effective community outreach, is easy for homeowners to participate in, and utilizes the expertise of housing counselors. Other mediation programs we investigated are less effective for lacking some of these characteristics.
Our review of monthly foreclosure statistics in 30 counties across the country and all 50 states shows that the foreclosure crisis continues to pose a serious threat to homeowners, communities, and the economy. Implementation of a mandatory mediation program as effective as Philadelphia’s will save these communities untold tragedies and significant economic losses. The federal government should invest in these successful local programs to complement the Administration’s efforts. [Emphasis added.]
Of course, another piece of the administration’s efforts was supposed to be mortgage cramdowns in bankruptcy cases. Here’s hoping ACORN has better success in getting resources to expand the Philadelphia model.
7 Comments
Comment posted April 30, 2009 @ 7:30 am
I foresee the same problem that exists with mediation in civil lawsuits. The mediators want to be selected and paid for their work. If they put too much pressure on the repeat users of their services, i.e. banks then they won't get picked for future mediations. If you don't get picked you won't get paid. It is one of the same reason why arbitration has failed in this country. But by letting bankuptcy judges decide the fate of a loan modification and given them the power to do thistwith a cramdown bill ensures some degree of impartiality will go into a modification plan. This is the very same impartiality that the banks now oppose!! I don't have a lot of confidence that the banks will mediate in any better good faith that insurance companies negotiate when it comes to car accident mediations!
Thanks
R. Grace Rodriguez, Esq. – LORGR.COM
Comment posted April 30, 2009 @ 9:14 am
This is a real concern, Grace, and that's why it's so important for judges or the court-appointed mediators (not bank-selected) to have the ability to stop the foreclosure sale if the bank has not cooperated and negotiated in good faith. Judge Rizzo in Philadelphia has been a stellar advocate for homeowners. As is pointed out in the report, mediation programs don't work unless they are mandatory, use effective outreach, have a low threshold for borrower participation, and use housing counselors to ensure affordability.
And of course, you're right, bankruptcy cramdowns would be the simplest federal solution, preventing 1.7 million foreclosures.
Comment posted April 30, 2009 @ 2:30 pm
I foresee the same problem that exists with mediation in civil lawsuits. The mediators want to be selected and paid for their work. If they put too much pressure on the repeat users of their services, i.e. banks then they won't get picked for future mediations. If you don't get picked you won't get paid. It is one of the same reason why arbitration has failed in this country. But by letting bankuptcy judges decide the fate of a loan modification and given them the power to do thistwith a cramdown bill ensures some degree of impartiality will go into a modification plan. This is the very same impartiality that the banks now oppose!! I don't have a lot of confidence that the banks will mediate in any better good faith that insurance companies negotiate when it comes to car accident mediations!
Thanks
R. Grace Rodriguez, Esq. – LORGR.COM
Comment posted April 30, 2009 @ 2:30 pm
I foresee the same problem that exists with mediation in civil lawsuits. The mediators want to be selected and paid for their work. If they put too much pressure on the repeat users of their services, i.e. banks then they won't get picked for future mediations. If you don't get picked you won't get paid. It is one of the same reason why arbitration has failed in this country. But by letting bankuptcy judges decide the fate of a loan modification and given them the power to do thistwith a cramdown bill ensures some degree of impartiality will go into a modification plan. This is the very same impartiality that the banks now oppose!! I don't have a lot of confidence that the banks will mediate in any better good faith that insurance companies negotiate when it comes to car accident mediations!
Thanks
R. Grace Rodriguez, Esq. – LORGR.COM
Comment posted April 30, 2009 @ 4:14 pm
This is a real concern, Grace, and that's why it's so important for judges or the court-appointed mediators (not bank-selected) to have the ability to stop the foreclosure sale if the bank has not cooperated and negotiated in good faith. Judge Rizzo in Philadelphia has been a stellar advocate for homeowners. As is pointed out in the report, mediation programs don't work unless they are mandatory, use effective outreach, have a low threshold for borrower participation, and use housing counselors to ensure affordability.
And of course, you're right, bankruptcy cramdowns would be the simplest federal solution, preventing 1.7 million foreclosures.
Comment posted April 30, 2009 @ 4:14 pm
This is a real concern, Grace, and that's why it's so important for judges or the court-appointed mediators (not bank-selected) to have the ability to stop the foreclosure sale if the bank has not cooperated and negotiated in good faith. Judge Rizzo in Philadelphia has been a stellar advocate for homeowners. As is pointed out in the report, mediation programs don't work unless they are mandatory, use effective outreach, have a low threshold for borrower participation, and use housing counselors to ensure affordability.
And of course, you're right, bankruptcy cramdowns would be the simplest federal solution, preventing 1.7 million foreclosures.
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