New law proposes bankruptcy-style supervision in home mediation
A new bill introduced into the senate could help clarify existing laws and allow many consumers who are suffering from high mortgage payments and the threat of foreclosure to enter court-supervised talks with their lenders.
Sheldon Whitehouse, a democratic senator from Rhode Island who introduced the bill, said it would help ensure banks don’t reject modifications and settlements that would benefit investors and homeowners.
“Servicers too often act in their own fee-driven interests and not in the interests of the investors who actually hold the mortgages,” Whitehouse, who chairs the Senate Subcommittee on Administrative Oversight and the Courts, said at the hearing. “A court-supervised negotiation can ensure that servicers don’t reject reasonable settlements.”
The proposal is similar to current bankruptcy mediation programs that exist in New York, Florida and the senator’s home state of Rhode Island, the news source says. In addition, Whitehouse says the added supervision of the courts would help pressure servicers to help homeowners they may have not previously agreed to assist.
In 2012, the number of homes in foreclosure is expected to pass the 13 million mark. As a result, many governmental officials are examining new ways to help homeowners avoid bankruptcy and foreclosure.