Confronting the foreclosure crisis

By Beverly Spears

A catastrophic combination of unethical lending practices, suspect foreclosure proceedings, and long-term unemployment has uprooted more than 70,000 Washington families from their homes through foreclosure in the last two years -- and foreclosures continue to soar.

Our state is now tenth in the nation in the number of homes in foreclosure. Homeowners of all income levels are affected.

Homes are people’s most valuable asset. This recession will end. If people can come through this economic storm retaining their homes, they have a much better chance of a speedy economic recovery.

Senate Bill 5275 and House Bill 1362 would require banks to sit down with homeowners in a face-to-face mediation process to seek a mutually beneficial alternative to foreclosure. The legislation does not mandate that a solution be reached; it provides a way for borrower and lender to talk about options. The bills would also ensure a transparent foreclosure process.

Enactment of this legislation was identified as a priority at the Puget Sound Alliance for Retired Americans Legislative Conference.

According to the Center for Responsible Lending, in 23 states and municipalities across the country the mediation process has helped 60 percent of participants avoid losing their homes. In 2008, Connecticut became one of the first states to pass mandatory face-to-face mediation. In that state, 70 percent of all mortgages in foreclosure qualified for mediation between the borrower and the lender. Over 60 percent of the mortgages that were mediated resulted in permanent loan modifications.

In New York, 42,000 mortgages went into foreclosure between January and June of 2010.  Seventy-five percent of those borrowers were able to sit down with their lenders to explore possible alternatives to losing their home. Of those who went to mediation, 80 percent succeeded in modifying their loans.

We should be helping families stay in their homes by giving them tools to avoid foreclosure. Mediation is a proven strategy that will benefit everyone: homeowners, lenders, the community, and our still-recovering economy.  For thousands of Washington families, this legislation would be an economic lifesaver.