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Oct. 14, 2009
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MORTGAGE CRISIS: Mediation plan blamed for delays

Banking official says program slowing efforts to resolve problem loans

By JOHN G. EDWARDS
LAS VEGAS REVIEW-JOURNAL
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Nevada's mortgage foreclosure mediation program and similar programs in other states are delaying efforts to resolve problem loans, the top official at the Mortgage Bankers Association said Tuesday.

"We find it's just slowing the process down," said John Courson, chief executive officer of the Mortgage Bankers Association.


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    • Courson spoke during a conference call from the association's annual convention in San Diego.

    Courson said programs like Nevada's Foreclosure Mediation Program, which allows homeowners facing foreclosure to demand mediation, often result in the homeowner having to wait until after mediation to complete forms needed for the lender to approve a mortgage loan modification.

    Tisha Black-Chernine, a real estate attorney, however, said mediation doesn't slow the process unless the lender is found to be mediating in bad faith.

    "I think (mediation) is doing what it was set up to do," Black-Chernine said.

    She said lenders are agreeing to reduce mortgage interest rates, although they are offering few principal reductions.

    For instance, she said, one of her clients, had two mortgage loans, one for 10 percent and one for 12 percent. He was able to refinance the two loans into one, a 3.5 percent, 30-year fixed-rate mortgage that cut his payments from $2,500 to $1,118.

    Assembly Speaker Barbara Buckley, D-Las Vegas, also disagreed with Courson's statements. She noted that one of the state's first mediation sessions was avoided after the lender negotiated with the homeowner.

    "In Nevada, we're ground zero for foreclosure in the nation," she said. "To me, foreclosure mediation is an opportunity for these Nevadans who have not been able to reach their lenders to sit across the table from them. Legislators wouldn't be initiating this law if the lenders were working with homeowners."

    The association, however, said that 75 percent of homeowners who seek mortgage modifications end up not returning the completed application forms.

    The group reported that the industry has provided more 5.2 million workout plans since July 2007 to help delinquent borrowers avoid foreclosure. In more than 2 million of those, lenders have reduced the borrowers' interest rates, lengthened their loan terms, added the delinquent amount to the mortgage balances, reduced the loan principal or some combination of those approaches.

    Yet, Buckley said one Nevada mediator told her he has been stymied in scheduling mediation sessions when lenders keep referring him from one person to another. That makes her wonder how lenders were treating homeowners before the Nevada Supreme Court began appointing mediators.

    Since July 1 when the program took effect, 2,664 homeowners have requested mediation sessions, according to the Nevada Supreme Court, which administers the program. Of those, 1,049 have filed documents and paid fees of $200 for the borrower and $200 for the lender to try to mediate new mortgage terms.

    More than 70 mediation sessions have been held so far, the state's high court said.

    Association chief economist Jay Brinkmann said the industry has processed most of the delinquent subprime mortgage loans and now is working with people who had strong credit and have lost their jobs. These people defaulted on prime mortgages.

    It's difficult to modify mortgages to accommodate an unemployed worker with no income, Brinkmann said. However, he said government-sponsored mortgage lenders are granting forbearance, a temporary postponement of loan payments, for 12 months in some cases.

    The economist said jobless rates and mortgage delinquency rates are tracking each other. Brinkmann expects national unemployment rates to increase to 10.2 percent by mid 2010. The federal government pegged national unemployment at 9.8 percent last month.

    Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.

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    Ernie O wrote on October 18, 2009 06:13 PM: Ok, I read that you give up the house, walk away, deed in lieu of, short sale, etc. But what happens after the bank agrees to the short sale? Can they come after for the difference? So now what, you have to keep looking over your back to see if anyone is going to sue for the loss. And is there life after walk away within a few years? Are there going to be banks that will allow you to finance with a reasonable downpayment? How does that effect your credit?


    TB wrote on October 15, 2009 11:22 AM: Cousin b, we are really getting off topic aren't we.
    I said it could take UP to 3 months to evict. Sounds like you got yourself into a bad situation.
    Renting is not fool proof. I do know most lease agreements have a grace period with a late charge. I personally would never have to 'bet on it', because details like that are in contracts (at least they are in a contract I would bother to sign) In fact yours is the first I have heard of that (apparently) didn't.
    I agree you do have to be very careful when renting. Do make sure the contract protects you as well as the leasor. In reality though 'just pay your rent' does pretty much prevent that predicament. I hope you have better luck in the future. Have a good day.


    brian wrote on October 15, 2009 10:25 AM: Slicko- if that's what those are, they should vanish, along with $0 down. Still, I blame the banks for offering them more than I blame people for taking them. They are designed to get people in over their heads for the purpose of giving the bank maximum down payment and equity in the property at an inflated value.


    cousin b wrote on October 15, 2009 10:24 AM: PS to TB- remember you said that it takes 3 months to evict. Wrong. 5 days after filing, you're out. Most leases are late on the 2nd or 3rd, so eviction can be by the 8th of the month. And will. Bet on it.

    You kind of sidestepped that by saying 'just pay your rent'.


    cousin b wrote on October 15, 2009 10:17 AM: TB- you've been very cool, but isn't this a bit oversimplified?

    Oh, so easy! I should have known!! duh!!!

    Except when your business dies and you can't sell something fast enough because it's the holiday crunch.

    Oh, and did I mention that this was a new manager and they refused to renew my lease and forged an eviction notice from the city?

    They wanted the house back to charge more money. I had been in 2 years and was never a whole month behind, and only behind twice at all in that period.

    Had they given me any form of cooperation, I'd have paid up by Jan 1 and still been there.

    They evicted me on the 27th. They refused to discuss or make any arrangement.

    Oh, darn- I should have just made more money.

    Next time I'll just do that. Make more. It's easy. Just make more people pay me for my services. If i just make more money, it'll be so easy.

    Why didn't I think of that??


    TB wrote on October 15, 2009 08:33 AM: Simple to solution to that~ Pay your rent.


    cousin b wrote on October 15, 2009 08:02 AM: TB- I was evicted here in town in '07 by a real estate/agent/pro/manager at Christmastimes though I was less than 30 days late on a single month's rent.

    The Constables here bend over for landlords.


    TB wrote on October 15, 2009 07:39 AM: cousin b, If you or someone you know is having trouble finding a suitable rental, check out realtor.com. There are thousands and they are all handled by property management teams or licenced realtors. This is much safer and contains more info, than an add in the paper or the dreaded craigs list. I worked with a prop. man. group who would e-mail me daily with new listings. Oh and by the way, it can take months for a leasor to evict a leasee for non-payment.


    perry wrote on October 15, 2009 04:28 AM: bankers association is full od S***


    Slicko wrote on October 14, 2009 08:11 PM: Brian- the CRA is the Community Reinvestment Act (google it) and ACORN is a Community Activism Group who finds mortgages for prostitutes (good that too). Or google CRA and Acorn. You will see that TRILLIONS in dollars have went toward mortgages to the unqualified, mainly minorities. It seems a Re-distribution of Wealth (life) to me.

    This is Fact. See it for yourself.


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