Several years have passed since the housing “bubble” burst, and with the passage of time scores of homeowners still find themselves unable to meet their mortgage payments. Along with that reality comes the menacing threat of eviction, the specter of homelessness and all the attendant problems that go with it.

The government’s steps to provide a reprieve from adversity, including variations of renegotiation or modification, have progressed with mixed results, and have generated mounting criticism directed at financial institutions, the real estate industry, and elected officeholders’ response to the mortgage.

Recently, a new approach was launched in various parts of the country, among them our own neighboring Orange County, which offers distressed homeowners the opportunity to have a “face to face” with their creditors. The two parties meet with a third, impartial monitor. This neutral mediator in some cases can develop a settlement attractive enough to the lender that offers the opportunity to make a profit by working with the homeowner to help them keep their house.

To explore the possibility of expanding this fresh approach in Los Angeles County, a presentation was submitted at a town hall meeting in Supervisor Mark Ridley-Thomas’ Constituent Service Center on Vermont Avenue near Manchester Avenue on July 9. Among those explaining this process were attorneys Patricia Pinto of the Legal Aid Society of Orange County and Los Angeles native Alon Cohen, now working with Washington, D.C.s’ Center for American Progress.

Pinto explained how the plight of so many homeowners, many of them elderly and previously affluent, begging for assistance, compelled judges within the court system to find an alternative to policies then in place that quite often provided inadequate resolutions to their predicaments.

Toward that end, in 2010 alternative interventions utilizing the judicial process were pressed into service at the state level. Legislation was drafted to protect homeowners from foreclosure by ensuring that lien-holders follow the state laws regulating home loans. Additionally, borrowers were given the opportunity to seek out other options, including modifications, before reaching the point of foreclosure.

These steps were put into practice as an adjunct to complement additional, pre-existing tools like unemployment compensation and other assistance to weather the housing crisis. At the same time, both the current and previous presidential administrations inaugurated programs for financial relief, even as criticism mounted.

In a post town hall interview, Cohen explained that any assessment of the (Barack) Obama administration’s measures to tackle the country’s woes should be viewed in light of the circumstances during which they were put into service.

“We started in uncharted territory, so it is not surprising that not everything worked as planned.”

Once in office, Obama staffers toiled to carry out the Troubled Asset Relief Program (TARP) inherited from George W. Bush, while developing a platform to deal with the housing crisis, in essence starting at square one, said Cohen. A major effort of the current administration, the Home Affordable Modification Program (HAMP), has been hampered because eligible mortgage buyers have not chosen to partake of it, at least not in the numbers anticipated.

Other obstacles confronting debtors included the evaporation of accessible credit to those who need it. This, of course, is complicated by the scarcity of funding throughout the economy, as a result of the Great Recession.

That is one attractive feature of mediation–its affordability. Already initiated in Connecticut and Florida, it’s been demonstrated to be free or economical for the government implementing it. Cohen continues his assessment:
“Mediation provides the servicer and homeowner a last, best chance to sit down face-to-face and talk about the terms of the loan. When they do so, our research shows that well over half the time the parties settle, meaning that not just the homeowner, but the lender itself will get more value by settling with the homeowner than it would (by initiating) foreclosure.”

Proof of this appraisal comes from Orange County. Program applicants are immediately granted a 90-day stay on their foreclosure, and are put in touch with a Pro Tem judge (who acts as the third party) serving as a mediator between them and their lien-holder. Participants in this process (currently unavailable in L.A. County) report that mediation has helped more than half of the 100 or so plaintiffs who used it to keep their homes.

Peter Kuhns of the Alliance of Californians for Community Empowerment (ACCE) explained that the purpose of the town hall is to advocate for the establishment of a similar program in L.A. County. In the meantime, a rally on this subject is tentatively scheduled for Aug. 18 at Los Angeles City Hall. Further information may be obtained at the alliance website (, or by calling (877) 633-9251.

People needing help immediately, or parties interested in becoming involved are invited to use this contact information, as well.

Additionally, homeowners seeking assistance with this timely issue are encouraged to research Assembly Bill (AB) 1639, and Senate Bill (SB) 1275, which have been passed to utilize these alternate methods to help the thousands of Californians still impacted by the mortgage crisis.