Housing Advocates Seek Foreclosure Options Consumer groups are pushing for stricter oversight when it comes to foreclosures. They say nationwide mediation programs could save thousands of people from losing their homes. 
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Housing Advocates Seek Foreclosure Options

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Housing Advocates Seek Foreclosure Options

Housing Advocates Seek Foreclosure Options

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This is WEEKEND EDITION from NPR News. I'm Scott Simon.

New flare-ups this week in the foreclosure crisis. Bank stocks got beaten up after word spread of pressure on lenders to buy back billions of dollars of questionable loans. And coming up we'll talk to Joe Nocera of the New York Times about the fallout over allegedly fraudulent paperwork in thousands of foreclosure cases.

But first, NPR's Chris Arnold reports on the efforts of consumer groups who argue that banks have also been deficient when it comes to helping homeowners avoid foreclosure.

CHRIS ARNOLD: Ever since these foreclosure paperwork problems came to light, the banks have said that they haven't been taking houses from anybody who shouldn't really be foreclosed on.�But regulators and housing advocates say that's not actually true.

Mr. MIKE CALHOUN (President, Center for Responsible Lending): They are foreclosing on people who could and should be able to stay in their homes.

ARNOLD: Mike Calhoun is president of the nonprofit Center for Responsible Lending. He says the banks aren't just making big mistakes with foreclosure documents.

Mr. CALHOUN: The same companies who are messing up this paperwork are the ones who administer the foreclosure prevention programs, and there's lots of evidence that they're messing that up as well.

Ms. NANCY LONGVAL: It was just so frustrating. I'm talking on a daily basis.

ARNOLD: In the state of Maine, Nancy and John Longval say that they've been struggling for the past two years to work with their lender, CitiMortgage. They say one day they'd be told that they qualify for help under a government program that would lower their mortgage payments. Then they'd be told that they don't qualify. They say they've faxed in documents, the bank has lost them.�

Ms. LONGVAL: They would tell us we needed this paperwork. This person would say no, you dont need that. We have that.

Mr. JOHN LONGVAL: What am I supposed to do? I can't get any answers.�

ARNOLD: Nancy says after a while she started losing her temper and yelling at the call center workers.

Ms. LONGVAL: People can only take so much. And a couple of times I've had them scream at me.

ARNOLD: Really? You mean the call center person would be screaming at you and you'd be screaming at them?

Ms. LONGVAL: Yeah. Yeah.

Mr. LONGVAL: I said, What are you doing? Just hang up. You don't have to listen to that nonsense.

ARNOLD: John Longval's a former construction worker. The couple bought their house back in 2004. They're grandparents now. And they wanted a house with some land around it, with space for the whole family. And they could afford that. They put down 20 percent and paid the mortgage for four years. Then they both lost work during the recession.

But they still did have some income. Enough - their housing counselor says -that they absolutely should qualify for a loan modification to let them keep their home.�

So John Longval says it's been really hard to be in limbo these past two years.

Mr. LONGVAL: This is our dream. This is our retirement, supposedly. And at this point right now, everything that we own, dreams and all, are gone if this does not work.

ARNOLD: CitiMortgage says they are working with thousands of homeowners to help them stay in their houses. And the Longval's do appear to be on the verge of finally getting a loan modification.�But because of problems like this, the state of Maine has started what's called a mandatory mediation program.

Ms. JENNIFER HAYBERINGORDON(ph) (Housing Counselor): So here in Maine we have a mediation process.

ARNOLD: Housing counselor Jennifer Hayberingordon explains that the idea is to cut through all this back and forth with the call centers and lost documents. If the homeowner requests it, the mortgage company has to provide a representative to sit down with the homeowner, their counselor, and a third party mediator. The mediator collects all the relevant documents before the meeting. And they can see then if the homeowner qualifies for an offer for a more affordable loan payment.

Ms. HAYBERINGORDON: So you have a day and a time where you can meet with all of those parties with somebody with decision-making ability. Can you make me an offer and what is that offer? And get the terms of that offer that day. You may get a permanent modification offered that day.�

ARNOLD: And it turns out that these efforts have been working really well. The state of Connecticut has a similar effort that's been up and running a little longer and is proving to be an effective backstop for homeowners who are told that they dont qualify for loan modifications.

Roberta Palmer heads up that effort for the Connecticut court system. She says most homeowners take advantage of this. And a majority of them - 63 percent -end up getting to stay in their house.�

Ms. ROBERTA PALMER: When it's done well, it really makes a huge impact.

ARNOLD: Mike Calhoun with the Center for Responsible Lending says that this is one of the top priorities for housing advocates right now. He's been in meetings with senior government officials this week to push them to adopt a similar mediation requirement nationwide. He thinks that that could help hundreds of thousands of people avoid foreclosure.�

Chris Arnold, NPR News.

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