Programs in 14 states requiring either preforeclosure mediation or conferences with troubled homeowners have done little to ease the foreclosure crisis, largely because the programs impose no significant obligations on servicers, according to a National Consumer Law Center study.
Because of this it is unlikely mediation will lead to fewer foreclosures, said the report, which was released this week.
Many of the 25 foreclosure mediation programs reviewed for the study lack mandatory rules and fail to impose sanctions for noncompliance with what minimal rules exist, the study said.
It also faulted the programs because they do not require servicers to provide information substantiating a right to foreclose and do not mandate analyses of loan modification alternatives. And it said many programs set such "unreasonable procedural barriers" that large numbers of homeowners could not participate.
"Servicers have all the discretion and homeowners have little or no power," said Geoffrey Walsh, a staff attorney at the center. "If the programs continue to demand little or no accountability from servicers, they will likely go the way of federal efforts to control foreclosures."
