State Mandated Foreclosure Mediation Programs Fail to Help Homeowners

The National Consumer Law Center (NCLC) reviewed 25 programs in 14 states and found no evidence the programs are helping homeowners modify their mortgage loans.   The programs are self policed by the financing institutions and impose no obligations for them to act.  While it may sound like a lifesaver thrown out to homeowners, in reality homeowners are still adrift in a sea of debt. The mediation programs include few if any mandatory rules and no consequences if the rules are not followed by the loan servicing companies.

The study titled State and Local Foreclosure Media Programs: Can They Save Homes?, states “Our review raised concerns about the kind of expectations that these programs may be encouraging. For example, there is as yet no data to confirm that foreclosure mediation programs anywhere have led to a substantial number of affordable and sustainable loan modifications.”

Homeowners facing possible foreclosure shouldn’t rely on any state program coming to their rescue.  Find out what rights are available as soon as possible.  Foreclosure procedures vary by state. If notice has been legally served it is vital homeowners respond within the legal time limit. Whether your mortgage is with a giant like Bank of America (NYSE: BAC) or a small regional lender, time is of the essence.

Follow these tips:

Don’t ignore the problem it’s not going to go away.  Many lenders will work with you in renegotiating your loan regardless if there is a foreclosure media program in place where you live or not.  Be persistent but polite in your dealings.  Try to get information in writing by snail mail or email rather than just over the phone.  During phone calls take notes; include the date, time, and the name of the person you’re talking with.

Seek counseling from professionals.  With today’s depressed economy, difficult job situation, and sinking real estate market, you’re not alone if you’re facing financial problems.

Be leery of programs that seem to be too good to be true.  Use the Internet in your search for solutions but keep in mind, anybody can throw up a website and promise you help with your loan modification… for the right price of course. Get references and qualified guarantees.  A loan modification company may say that they will guarantee that they can modify your loan, but that modification may not be anywhere close to what you need.

Recognize that you may have to sacrifice to save your house.  It may become necessary to sell assets, cut expenses and perhaps even take a second job to generate additional income.