Amanda Voisard/THE WASHINGTON POST - Louise Golden, 79, almost lost her home in Lanham, but she was able to avoid foreclosure through a mediation program started last year.
Louise Golden, 79, recently stood at the front door of her tidy brick split-level in Lanham, still shocked to hear the terms of the refinancing agreement she and her now-deceased husband, Stanley, signed in 2006.
“I thought it was a fixed-rate mortgage,” said Golden. “I didn’t know what a five-year ARM was.”
Funding allocations for the Emergency Homeowners’ Loan Program.
“You didn’t have a five-year adjustable rate mortgage,” said her attorney, Gretchen C. Reimert. “It adjusted after 30 days.”
The interest rate jumped from 2 percent to 7.7 percent in one month — and kept climbing.
Golden nearly lost her home after her husband died. But Golden and Reimert were able to prevent foreclosure through a mediation program started a year ago in Maryland. After a face-to-face meeting with her lender, Golden signed a loan modification in March, returning her interest rate to 2 percent.
“Until then, I was just about insane,” Golden said. “I don’t know what I would have done if I’d lost this.”
But not everyone has been as fortunate.
From last July, when the program began, through the end of May, Golden was one of only 100 homeowners who received a loan modification. Of the 829 mediation cases classified as closed, slightly more than 150 have contingent agreements that allow homeowners to stay in their houses until a final resolution is made. About 120 cases have resulted in defaults because the homeowners did not show up for their scheduled hearings, and 50 homeowners were ruled ineligible for the program because of bankruptcy or for other reasons, state records show.
Reimert said one of her clients went to mediation in December, and she’s as uncertain about her future today as she was last year.
“She gave all the necessary financial documents, and six months later she’s waiting to hear back,” said Reimert, who heads the Foreclosure Legal Assistance Project for the Maryland Legal Aid Bureau.
Reimert acknowledged that the process is better than it was before the state created the opt-in mediation program, which allows homeowners to request a face-to-face meeting with mortgage company representatives before an administrative law judge.
A good idea
In 2009, Gov. Martin O’Malley assembled a group of his legislative staff, housing counselors, lawyers, bankers and mortgage servicers to find a creative way to help troubled homeowners.
O’Malley had already pushed other aggressive foreclosure prevention measures that toughened oversight of the mortgage-lending industry, prohibited prepayment penalties and extended the time before a home goes into foreclosure. But with foreclosures still soaring, O’Malley wanted another tool to help keep homeowners in their houses.
The task force came up with the mediation program, now a year old. The District started a mediation program in May, and Virginia officials are working on foreclosure prevention measures.
“It’s a program that is still new, but it also can use some improving,” Reimert said.
She and other attorneys are hoping that state lawmakers revisit the legislation to make it more beneficial to homeowners. The state, meanwhile, is holding workshops to let homeowners know about the program. The foreclosure mediation program is also mentioned in promotional mailings, and homeowners who call a state housing hotline are told about it.
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