Mayors Call For Mandatory Settlement Conferences

Posted by Orb Staff on June 12, 2009 No Comments
Categories : Mortgage Servicing

S. Conference of Mayors and nonprofit ACORN are urging states to enact stronger laws requiring mandatory settlement conferences. On Thursday, the conference's president, Miami Mayor Manny Diaz, and ACORN CEO Bertha Lewis led a conference call that included Philadelphia Mayor Michael A. Nutter, New York City Mayor Michael Bloomberg, Los Angeles Mayor Antonio Villagraigosa and Oakland City Administrator Dan Lindheim. The parties advocated for measures similar to those that have already been enacted in Philadelphia, where lenders and borrowers are required to attempt to negotiate a mutually agreeable refinancing or modification of the mortgage that results in a borrower staying in his or her home. According to estimates from the City of Philadelphia and ACORN, between 50% and 80% of households eligible for mandatory settlement appear at their conference. To date, 1,200 households, or 35% of those who showed up, have reached a settlement, and a further 1,500 households are in negotiation. In late April, ACORN released a report titled ‘[link=http://www.acorn.org/fileadmin/ACORN_Reports/2009/Road_to_Rescue_Report.pdf][u]Road to Rescue: How the Philadelphia Model Can Reduce Foreclosures Across the Country[/u][/link].’ "Innovative local programs like the Philadelphia model of mandatory mediation were won through old-fashioned community organizing by neighborhoods frustrated with the lack of progress from industry or the federal government," says ACORN's Lewis. Several states, including New York, have passed laws that require some form of settlement conferences or mediations, but they have had limited degrees of success. To date, fewer than half of New York City homeowners in foreclosure have taken advantage of settlement conferences, according to Bloomberg, who announced a new public campaign Thursday to encourage more New Yorkers to get free legal assistance, counseling and education services. Lenders' notices about meetings are often difficult to understand and get treated as junk mail, Bloomberg says. He also cited as a problem the trend of lenders sending representatives to meetings, even though the representatives are not authorized to approve loan modifications. "While we want to link distressed homeowners to counselors, we also have to do more to bring lenders to the table," Bloomberg said. "A strengthened settlement conference process between lenders and homeowners would mean more modifications and faster resolutions for homeowners." New York Gov. David Paterson recently [link=http://www.mortgageorb.com/e107_plugins/content/content.php?content.3639][u]called for reform[/u][/link] of the state's mortgage industry that would include expanding mandatory settlement conferences from subprime borrowers facing foreclosure to all troubled borrowers. The Mayors Conference and ACORN are promoting laws that would penalize lenders or their designees for failing to appear at a scheduled conference or appearing without full authority to enter into a settlement or loan modification. Penalties could include default, non-suit or dismissal of the foreclosure action with prejudice, advocates say. Settlement conferences would also have to use as a guideline the federal Home Affordable Modification Program (HAMP). Economists at the Federal Reserve Bank of New York estimate that between 500,000 and 600,000 loans in New York City may meet the criteria for HAMP modifications. SOURCES: U.S. Conference of Mayors, Office of NYC Mayor Bloomberg

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