This spring, when the Oregon Legislature created a mediation program to help homeowners negotiate with lenders and avoid or modify foreclosures, there was hope that the new requirements would prompt lenders to cooperate more with homeowners to preserve their housing. But the high hopes of the Oregon Department of Justice, which oversees the new program, have given way to frustration.
Keith Dubanevich, associate attorney general, anticipated the new program would result in about a thousand modified mortgages a month. The number actually modified: zero.
The reality, Dubanevich said, is that the bill’s language gives the lender “the option to go to mediation or not.”
The law was passed following a landmark $25 billion settlement between 49 state attorneys general and the country’s five largest loan services over charges that these financial institutions routinely foreclosed on homeowners without the proper documentation. The agreement, concluded this past February, included provisions aimed at providing relief to homeowners rattled by the housing collapse. Continue reading