So far, few have applied for mediation

CARSON CITY — Last spring state legislators were certain the foreclosure crisis in Nevada was so severe that thousands of residents each month would apply for assistance under a new law to help them keep their homes.

But five weeks after the Nevada Foreclosure Mediation Program became law, 10 hearings have been scheduled.

At these hearings, mediators work with delinquent home-owners and their mortgage lenders to determine whether the loan can be modified to keep the family in the home.

Verise Campbell, the manager of the mediation program, acknowledged last week that 10 is a small number, but she said many more people have called for information about the program after receiving foreclosure notices. Homeowners must pay $200 upfront if they apply for mediation.

Campbell predicted as many as 1,000 hearings per month will be conducted within six months as the program becomes better known.

Lenders have been filing 7,600 foreclosure notices per month in Nevada.

The law went into effect July 1, and the initial mediation hearings should begin in two weeks.

Some in the banking industry were surprised by the slow initial reaction to the program.

"I recognize the program is just starting, but for all the hype, I would think there would have been a lot more," said Bill Uffelman, president and chief executive officer of the Nevada Bankers Association.

Uffelman speculated that so few people are applying for mediation because they cannot even pay the costs of a modified loan.

"It may be people recognize that all the loan modifications in the world aren’t going to help them if they have lost a job and income," he said.

In some households both spouses worked, he added, but one has lost his or her job and their combined income has fallen so much that they cannot afford a mortgage.

Uffelman said the $200 charge should not be an obstacle for home buyers to participate in the program.

If they cannot pay that much money, then they can’t pay the costs of a modified loan, he said.

Homeowners must miss at least three monthly mortgage payments before a lender can file a foreclosure notice.

During the legislative session, Assembly Speaker Barbara Buckley, D-Las Vegas, predicted 3,000 homeowners per month would apply for mediation to keep their homes.

Then in June, as the Supreme Court considered regulations to put the program into effect, Chief Justice Jim Hardesty predicted that number would be 1,250 to 1,500 per month.

Expecting a large number of residents to apply for the program, more than 420 lawyers, ex-judges and trained mediators applied to serve as mediators. One hundred of them were trained last week in Reno and Las Vegas in foreclosure law and how they might mediate various types of cases.

Uffelman and other banking industry representatives testified for the program during legislative hearings.

"We got the original bill amended so we could work with it," he said "The banks I work for will participate in the program."

Based on studies, Buckley said during the legislative session that the mediation program might keep 17,700 families from losing their homes. Last year, foreclosures were filed on 77,000 Nevada homes.

Under the law, lenders since July 1 have been required to include applications and information about the Foreclosure Mediation Program when they send homeowners foreclosure notices. The homeowners can request a hearing with a mediator and their lenders to try to work out loan modifications that keep them in their homes.

Lenders are not required to agree to loan changes, but they must make a good faith effort during the mediation to work out a deal. If the mediator concludes they have not, then Campbell can halt the foreclosure.

That would force the lender to get a court order to proceed with the foreclosure. The lender also must pay $200 to cover costs of the mediation.

Information about the program can be found on the Nevada Supreme Court website at www.nevadajudiciary.us or by calling Campbell in Las Vegas at 486-9380.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.