Swanson pushes again for foreclosure mediation program

Chris Rizo Jan. 6, 2010, 1:56pm

Lori Swanson (D)

Debra Hilstrom (D)

ST. PAUL, Minn. (Legal Newsline)-Minnesota Attorney General Lori Swanson said Wednesday that she will once again push for a mediation process for struggling homebuyers facing foreclosure.

Last year, Republican Gov. Tim Pawlenty vetoed the Homeowner-Lender Mediation Act, which would have required lenders to offer borrowers the opportunity to participate in non-binding mediation before the lender may foreclose on the home.

The bill was reintroduced this year.

Swanson, a Democrat, said a mediation program would provide borrowers with a venue to negotiate with lenders in an attempt to save their homes. The program, she said, would allow borrowers and lenders to discuss whether a loan modification, short sale, or another remedy is available besides foreclosure.

"We keep hearing from consumers who face corporate bureaucracies in which paperwork gets lost and calls aren't returned, or where banks claim their hands are tied because the loan has been sliced up and sold on Wall Street," Swanson said. "We need to cut through the red tape and get some help to people."

The Homeowner-Lender Mediation Act is based on the Farmer-Lender Mediation Act, passed by the Minnesota Legislature in 1986 to address the farm crisis. Under the widely successful program, lenders could not foreclose on a family farm unless they first offered to mediate the debt.

About 14 states have home foreclosure mediation programs. Nevada, for instance, has a mandatory mediation program administered by the state Supreme Court. The state high court in Florida recently ordered the creation of a similar program.

A California state lawmaker, Assemblyman Pedro Nava who is running for state attorney general, has expressed interest in starting a foreclosure mediation program in the Golden State.

"Around the country, courts and legislatures are stepping up to create a process where homeowners in trouble can work with their lenders to try to find solutions. Minnesota needs to step up too," said Minnesota Rep. Debra Hilstrom, chief House author of the proposed Homeowner-Lender Mediation Act.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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