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March 01, 2010

Residential Foreclosure Mediation Tools: More on Mortgage Modifications, FDIC.

**Author's Note:  If you have reached this blog through a list that carries advertising, your computer may or may not be put at risk either through the list or through the advertising.  I do not accept or authorize any commercial advertising of any kind on any list or post.  Placing commercial advertisements with or near any of my web log posts is prohibited.  Further, I do not recommend any products or services advertised with or near any of my posts or any list of my posts.**

   This is an update on news affecting the Residential Foreclosure Mediation Tools that are discussed in the posts here on February 25, 2010  and on February 26, 2010, and which are discussed on the Insurance Claims and Issues Web Log, under the Category of "Mediation".  See in particular the posts there of January 27, 2010; January 29, 2010; and February 8, 2010.

   The Federal Deposit Insurance Corporation is floating its own proposal to relieve the pressure of Foreclosure Lawsuits.  The FDIC is considering a new program of:

  1. "Earned principal forgiveness."  Staying current on Mortgage payments could earn qualified homeowners-borrowers a reduction in Mortgage Principal.
  2. The "earned principal forgiveness" would be limited to Mortgage loans "'significantly underwater'".  FDIC Chair Ms. Sheila C. Bair, quoted by Renae Merle, "FDIC to Test Principal Reduction for Underwater Borrowers" (Washington Post Online, Friday, February 26, 2010).
  3. The program would also be limited "limited to loans acquired from a failed bank seized by the FDIC." Renae Merle, Washington Post Online, supra.

   Putting Principal back in the pockets of borrowers-homeowners is not based on opinions, but on demonstrated evidence.  Its significance is manifest to Mediators who handle Residential Foreclosure Mediations.  "'Whether homeowners have equity in their home is a key predictor of whether they will default on their mortgage or redefault on a loan modification.'"  Ms. Julia Gordon, Policy Director for the Center for Responsible Lending, quoted by Renae Merle, supra.

Please Read The Disclaimer.

Posted by on March 01, 2010 at 08:18 AM in Mediation, Mortgage Insurance |

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