Congressman Steve Cohen (D-Tennessee) last week introduced a bill aiming to help prevent foreclosures across the country.
After the House passed measures to terminate federal foreclosure prevention programs, Cohen stepped in with a new measure to provide federal funding for foreclosure mediation programs. Cohen’s office said the legislation passed by the House “harms homeowners.”
His bill would establish a grant program for state and local governments to provide mediation between homeowners and lenders in order to pursue alternatives to foreclosure. While the measure seems to have the best interests of the homeowner in mind, critics are calling it “another token gesture which will have little actual effect.
“Foreclosures evaporate middle class wealth,” said Congressman Cohen. “My bill would help families keep their homes and avoid the stress and difficulties of foreclosure.” But would it? “Although many states have adopted measures to ensure “fair play” by lenders in their foreclosure process, it does nothing to stem the tide of foreclosures”, argued one critic. “If a person cannot afford their home, they cannot afford their home. All fo the mediations in the world will not matter if a homeowner simply can no longer afford the home and the mediation process just wastes time and resources, only to reach the same ultimate end.”
The Preventing Homeowners from Foreclosure Act of 2011 would create a grant program to help communities establish their own foreclosure mediation programs.
The mediation would postpone foreclosures of owner-occupied residences until the homeowner has an opportunity to meet with a housing counselor and explore viable options to avert foreclosure, such as loan modification, short sale, or deed-in-lieu. The very same process already exists for HAMP, HARP, and NACA programs, but those programs have not been able to stem the tide of foreclosures.
Homeowners and lenders would have an opportunity to meet face-to-face before any foreclosure proceeded.
The program would also establish an outreach program to help raise homeowner awareness about the program. The bill would require any state that receives help from the grant program to keep a record of each mediation carried out, including the nature of any loan modification.
Cohen’s bill has been referred to the House Financial Services Committee for consideration.
