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Pre-Foreclosure Mediation Plan Rolls Out in Florida

A new trial program in Florida is aiming to keep people out of foreclosure and staying in their homes.

Fannie Mae is running the foreclosure prevention program that attempts to get banks meeting with borrows who are facing foreclosure in a timely matter. This way, those borrows can start the process of filing for a mortgage modification before it’s too late to do anything.

For Floridians this is good news considering that the state has the highest foreclosure rate in the country. According to a spokesperson for Fannie Mae, at the end of September, 24.7 percent of all mortgages in Florida were at least 30 days delinquent, if not more. Nationwide the foreclosure rate is only at 13.8 percent.

One Florida woman shared her home struggle story with The Wall Street Journal. In March of 2009 the woman had lost her job as an account executive and started to fall behind on mortgage payments in 2010. At that time she contacted her lender to learn more about getting a mortgage modification, but attempts to reach some sort of a resolution were futile. By September she was informed her home would be foreclosed on; however, her case went to a nonprofit that runs mediations within six of the judicial circuits in Florida. In the end she was able to receive a trial modification under the Home Affordable Modification Program, commonly just called HAMP.

As of now her monthly mortgage payments have been lowered by $500, and it’s possible that forced mediation can be the reason behind the decreased payment.

For now the Fannie Mae program is only at six of Florida’s 20 judicial circuits, and only with loans that are owned or guaranteed by Fannie Mae. These restrictions mean that there are still going to be plenty of people in need of a mortgage modification that will still need to rely on outside help in order to try and obtain faster face-to-face meet up with banks and lower monthly payments.

In the future Freddie Mac also plans on rolling out some sort of fast-track mediation program for Florida.

Source: The Wall Street Journal, “Fannie Tests Foreclosure-Prevention Plan in Florida,” Anthony Klan and Nick Timiraos, 8 Jan 2011

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