Minnesota's attorney general and two Democratic lawmakers in the state say they will again push to enact a foreclosure mediation bill into law.
Attorney General Lori Swanson, state Rep. Debra Hilstrom and state Sen. Linda Scheid say the aim of the bill – the Homeowner-Lender Mediation Act – is to provide a process through which homeowners facing foreclosure can get an audience with their lender to discuss whether a loan modification, short sale or other remedy besides foreclosure is an option.
‘We keep hearing from consumers who face corporate bureaucracies in which paperwork gets lost and calls aren't returned, or where banks claim their hands are tied because the loan has been sliced up and sold on Wall Street,’ Swanson says. "We need to cut through the red tape and get some help to people."
Last year, Gov. Tim Pawlenty, a Republican, vetoed the Homeowner-Lender Mediation Act, which is based on a farmer-lender mediation bill signed into law by the Minnesota Legislature in 1986 to tackle the farm crisis.
In 1986, Minnesota became the first state in the nation to enact a farmer-lender mediation law, under which a lender could not foreclose on a family farm unless the lender first offered to mediate the debt. The original Farmer-Lender Mediation Act was renewed by the Legislature last year. In November 2009, the University of Minnesota Extension Service announced that a record number of farmers were using the mediation program, with mediations up by 86% in 2009 compared to 2008.
"Our bill tries to bring some common sense to the process by requiring lenders to communicate with borrowers before a foreclosure occurs to see if a reasonable solution can be found to avoid foreclosure," adds Scheid, chief Senate author of the bill.
A number of other states, including Connecticut, New Jersey, Maine and Nevada, have put in place mediation programs. Last week, the Florida Supreme Court ordered a similar program requiring that mediation be attempted before a court hearing is held on a foreclosure.