In April 2009, the Mortgage Bankers Association — with the help of Congressional Republicans and the rest of the banking industry — successfully lobbied against the adoption of mortgage cram-down legislation, which would have allowed judges to modify mortgages for troubled borrowers in bankruptcy court. That legislation’s defeat, and the MBA’s subsequent celebrations, led Sen. Dick Durbin (D-IL) to say that when it comes to the Senate, the banks, “frankly, own the place.” And with 2010 coming to a close, the MBA is once again standing in opposition to programs aimed at keeping families in their homes — this time by taking aim at what are known as mortgage mediation programs, which push banks to negotiate with borrowers before finalizing a foreclosure:
John Mechem, a spokesman for the Mortgage Bankers Association, which represents the largest mortgage lenders, said the group is opposed to both mandatory and voluntary mediation programs. He argued that the programs are expensive and are often used by borrowers as a tactic to stall foreclosure.
As The Wonk Room explained, with foreclosures on pace to top one million this year and federal foreclosure prevention programs falling woefully short of their goals, mediation has been incredibly successful, as the sessions require lenders to actively negotiate, instead of giving borrowers the run-around. As Christopher Brecciano, a Connecticut attorney who represents borrowers, explained, mediation “requires the borrower to sit eye to eye with the bank’s attorney and means there is someone to hold accountable rather than just some service person on the telephone.” Sixty-two percent of those entering Connecticut’s mediation program received a permanent loan modification, while in Nevada seventy-four percent received one.