The foreclosure debacle across America is saddest when individual stories are laid bare.
The Port St John, Florida John Doe of this morning’s story was laid off from construction over two years ago, and has been struggling to keep a roof over the heads of his wife, three children and two dogs since then. The replacement job he managed to secure pays two thirds less, and, inevitably he sank slowly under water.
Wells Fargo was initially disinterested in restructuring or even temporary deferral, and filed foreclosure in December 2009 when his default reached six months. Undeterred, our John Doe hired a lawyer to get him into court appointed mediation, hopefully, for him, leading to lower monthly repayments.
All repossession notices in Florida are supposed to automatically lead to mediation – the lawyer for the household is at pains to stress that his client is just asking for temporary relief, and certainly is not expecting an exception to get his home for free.
Head of Wells Fargo Home Communication Teri Schrettenbrunner says that, although the bank is keen to help American families stay in their homes if their financial hardship can be proved, it is also bound to honor contracts on the input side of its cash flow.
This morning’s John Doe and his lender bank are not alone in their predicament – millions of working class to middle class families (and their banks) are facing similar dilemmas. Analysts estimate that up to 10% of all American home mortgagees are sixty days or more delinquent, with Florida double this. While judicial mediation seems attractive, the bottom line is that, so far, Obama’s strategy has hardly made a dent, with HAMP’s Home Affordable Modification Program having achieved just 300,000 loan modifications out of a potential 3.2 million customers to date.
Washington’s efforts are being underpinned by a number of individual State initiatives that are hopefully bringing power to Obama’s elbow:
Nevada implemented a mediation program that empowers troubled borrowers to insist on mediation, and appointed 150 mediators to get things rolling.
Maine set guidelines for scheduling mediation conferences, granting stays of execution and proving good faith. It also penalizes lenders who decide not to go along with things its way.
New York State amended its mandatory settlement regulations to embrace all foreclosures affecting borrowers’ primary residences.
Many other States have something similar in place.
Florida, on the other hand, is sadly lagging, which is perhaps the reason why its foreclosure numbers are so high. The Bill introduced by Senator Bill Nelson in December 2009 with something similar in mind has been assigned to a Committee, with nothing else forthcoming since.
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