Maryland mediation program to avoid foreclosures less successful than anticipated - The Washington Post http://wapo.st/pirB5a

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Thanks, Jeff.  I think the article does a good job of reminding us that there are two sides to every story.  Still, I have to say that I was genuinely surprised to read that 120 homeowners didn't show for their appointments.  I'm intrigued!

The article reports that in its first year, there were 829 completed mediations in Marylands program. Of those it appears 250 resulted in some agreement (100 agreed loan modifications and 150 contingent agreements). That's a 30% agreement rate.

I'm not a fan of individual mediators keeping track of "settlement rates," yet on a systemic and programmatic basis, one may ask if a mediation program is working if it results in agreements less than a third of the time.

(I'm also very aware that I'm not seeing in this article whether Maryland tracked when the parties may have agreed that some other outcome was the best option to them, including a foreclosure. And I would leave it to others to decide whether that should be a measure of such a program's success. My guess is the lending community may think it is, and the borrower community may think it isn't.)

The Maryland program expected 5000 claims in that year. They received 1000. And for comparison, there were nearly 5000 foreclosure events in the first quarter of 2011, which was identified as a downturn, suggesting there was a universe of more than 20,000 foreclosure events that could have resulted in a mediation. So the conversion of foreclosure-to-mediation rate is even lower, something on the order of 5%. And the foreclosure-to-mediated agreement rate becomes infinitesimal.

Is there anything in Washington's statute that maybe Maryland doesn't have that may suggest a different outcome for Washington's program?

Was there an affect on the negotiation culture, creating agreed outcomes outside of the state-sponsored mediation program? I'd guess not, but we don't know that.

These are questions mostly for those interested in the policy of a mediation program. What may be most important for us, given these numbers, is to ask what can we do as individual mediators to create a better opportunity for the parties to reach an agreed resolution?

As you note, Vivian, the 120 no-shows are intriguing. They may present an opportunity. Is there anything else?

In case anyone missed it this past weekend's NYT sunday magazine had an exit interview with the outgoing(gone) FDIC Chair Sheila Bair wherein some very pertinent perspectives on the loan modification tensions are delineated.

 

http://www.nytimes.com/2011/07/10/magazine/sheila-bairs-exit-interv...

 

Plus I attach a pdf of the article.  Look to the hoghlighted section on loan modification:

 Cheers

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