Fannie Mae has started testing a foreclosure-prevention program in Florida that is designed to bring banks and troubled borrowers together earlier, The Wall Street Journal reported.
The idea behind the program is to get banks and borrowers to negotiate mortgage modifications and other alternatives before foreclosure becomes the only option. The program gets borrowers meeting with the banks four months after falling behind on late payments.
Several other states have laws mandating a face-to-face meeting between banks and borrowers who are late on their payments. But many say the process is plagued by delays that often give homeowners almost no chance of avoiding foreclosure. In Florida, troubled borrowers usually don’t meet with banks until eight months after falling behind on payments.
The Collins Center for Public Policy, a Miami-based nonprofit that is running mediations in six circuit courts, said it has received 1,800 notifications of default since the program began. However, only a few dozen cases have been settled so far.