This is an update to previous posts here regarding Residential Mortgage Foreclosure Mediations, most recently on April 15, 2010, March 25, 2010 and March 26, 2010.
Results are disheartening from the Administration's attempts to arrange voluntarily modified mortgages, and so reduce the number of defaults and Foreclosures. See David Streitfeld, ""Failures Up In Modified Mortgages" p. B1, col. 6 (New York Times Nat'l ed., "Business Day" Section, Thursday, April 15, 2010).
"Principal" reduction is apparently not going to be a tool volunteered by mortgage servicers and investors. They may not have either the authority or the stimulus to resolve mortgage defaults by anything less than Foreclosure. In fact, one of their reporters has described principal reduction itself not as an option, but as a "whim":
The notion of cutting principal, however, has already run into some resistance from the big banks, which do not want borrowers to get the idea that their mortgage can be chopped on a whim.
Streitfeld, April 15, 2010 New York Times, supra.
If borrowers took the position, which they have not taken, that principal repayment is a "whim," that could be described as foolish, for one thing. It would certainly be counterproductive to any resolution short of a Foreclosure contest, as well.
Florida now requires Residential Mortgage Foreclosure Mediations in virtually all Residential Mortgage Foreclosure actions filed in the State. If Mediation is to have any hope of success in resolving these mortgage disputes, and not merely delaying their resolution by costly Foreclosure contests, more than moonbeam "whims" will be required of the parties who sit at the negotiating table.
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