Finding A Way Out of the Foreclosure Fraud Crisis
While there’s been plenty of bad news and criticism surrounding the foreclosure fraud crisis, we’ve heard very little in terms of solutions or even short-term remedies. Everyone seems to acknowledge, at least to some degree, that this is a significant problem, but few can tell us how to get out of the mess.
So kudos to the Center for American Progress for at least initiating a conversation on what a possible solution to untangling these problems could look like. Just after both Bank of America and Ally Financial announced that they were resuming active foreclosures in at least 23 judicial foreclosure states, CAP suggested the creation of a foreclosure mediation program as one means of giving responsible homeowners and their lenders or mortgage servicers an opportunity to review the documents used in support of foreclosure to ensure the foreclosure is both legal and appropriate.
There’s plenty to consider in this deceptively simple solution. To begin with, by forcing a face-to-face meeting with the parties and a neutral fact-finder, homeowners, lenders, and future home purchasers (along with others involved in these transactions including agents and title companies) can have some certainty that these future foreclosures are lawful.
Second, mediation in general often works to resolve disputes in a fashion not possible in traditional litigation. Many of the thousands of people affected by the foreclosure crisis could keep their houses if lenders and servicers would work with them on a modification. This includes the thousands of homeowners who fell behind on mortgages because of a job loss or medical emergency, to those homeowners who are upside down in their homes as a result of circumstances well beyond their control.
The reality is the federal Making Home Affordable programs and related state initiatives had a similar goal in mind but with no real leverage to make lenders negotiate. The exposure of this fraud, and thus the exposure of potential liability connected with this fraud, can change that.
photo courtesy of respres via Flickr