December 10, 2008
Taylor to Introduce
Mortgage Mediation Act
Senate Housing Committee Chair Responds to Wisconsin Foreclosure Crisis
MADISON- Senator Lena C. Taylor (D-Milwaukee), in response to the expected 25,000 foreclosures in Wisconsin this year, has proposed the Mortgage Mediation Act, that would create a required first step in the foreclosure process. Aimed at reducing the time, expense and potential losses involved in foreclosures, the legislation establishes an early and active court presence in foreclosure cases. The results should yield greater efficiency in case resolution and better outcomes for both homeowners and lenders.
Taylor’s Mortgage Mediation Act would require the lender to give the debtor notice of the right to mediation. “When performed successfully,” Taylor said, “mediation has the ability to keep more people in their homes, lower our rates of foreclosures, and significantly reduce the courts time and workload involving these cases.” The Mortgage Mediation Act is modeled after the successful “Farmer-Lender Mediation Act” adopted by the Minnesota Legislature in 1986 to tackle the farm crisis, helping to save over 14,000 farms from foreclosure.
Fast tracked to occur within twenty days of the mediation request, involved parties would be required to negotiate in good faith and could agree to a range of remedies, to include adjusting the interest rate or the principal, extending the repayment period, or modifying the loan terms. The foreclosure process would be deferred for at least 90 days after the homeowner requested mediation, so long as the parties negotiated in good faith. If a lender failed to act in good faith, the homeowner could request court-supervised mediation; in which case, the foreclosure could be held in abeyance for another 60 days.
According to Senator Taylor, “Wisconsin’s foreclosure process is complex, time consuming and costly for both borrowers and lenders. “ This legislation would ensure that even if a settlement cannot be reached, mediation efforts would assist both parties in creating a plan to streamline proceedings, avoid unnecessary delays, and potentially shorten the foreclosure process by up to 15 months.
This legislation is a brain trust of numerous stakeholders in the community, who are deeply concerned about the nationwide foreclosure crisis and the mandate from the federal government for states and municipalities to find creative ways of reducing the impact on our neighborhoods and ultimately, our tax base. Taylor is the chair of the Senate Committee on Judiciary, Corrections, Insurance, Campaign Finance Reform, and Housing and has sought the involvement and input of other elected officials, including the governor, state agencies, and interest groups in crafting this proposal to fully appreciate the concerns of all persons and parties in the foreclosure process.
“I strongly believe that this legislation will help avoid unnecessary foreclosures, and keep our neighborhoods strong and devoid of blight resulting from vacant properties,” Taylor concluded.