On Saturday, our Legislature continued to rearrange the Titanic's deck chairs, tinkering with a Bill that would permit borrowers to demand mediation with their lender while in the midst of a foreclosure. The lender would be compelled to pay $300 toward the mediation, and the borrower would pay $50. Sen. Frosh says "anything the parties want to negotiate, they can negotiate." And most of the time, that will be nothing!
(and if you are interested in reading the Bill, it is HB 472, not HB475, as cited in the Daily Record article)
I hate to sound jaded, but borrowers who couldn't afford the home in the first instance, and can't afford it during the foreclosure process, bring little to the table. Add to that the mess of relationships that define the "loan-servicer-clearinghouse-mortgage trust-investor" holding the note and beneficial interest in the deed of trust, and you have a process that is poised to do absolutely nothing. Now, the Bill would require disclosure of the entity authorized to modify the loan when the notice for foreclose is filed, but I wouldn't expect the notifications to be complete and accurate, merely pro forma.
Even when you represent a "lender," it can take weeks or even months to get a clear answer on exactly who the "client" is in a particular case.
The Bill does add a whole new layer of litigation to the foreclosure process. If the borrower demands mediation, the lender may petition the court to dismiss the petition, alleging various listed factors. The Bill is not clear whether the borrower and/or the lender will be entitled to any pre-hearing discovery on the issues.
I can't wait to play in the sandbox with this new toy!
