Minn. AG proposes mandatory mediation in foreclosures
Attorney General Lori Swanson is proposing legislation that would make lenders negotiate with homeowners before foreclosing on properties, the Associated Press reported Thursday.
Swanson outlined the "Homeowner-Lender Mediation Act" at a Capital news conference.
Swanson says her proposal is modeled on a farmer-lender mediation law enacted during the 1980s farm crisis.
The "Homeowner-Lender Mediation Act" would give homeowners facing foreclosures a limited time for mediation process, which would include adjustment of interest rates and principal and repay periods.
Lenders would be required to come to negotiation processes in good faith, reported the Associated Press.
Swanson, a Democrat, says she hopes to work with Republican Gov. Tim Pawlenty on the proposed legislation.
The Pioneer Press reported, the rising number of foreclosures could erode nearly $70 billion in home values for Minnesotan by 2010, Swanson said.
Swanson acknowledged during the news conference that farm loans back in the 1980s were not sold off, sliced and re-packaged as securities, a common practice in recent years with home mortgages. "That process of making securities out of home loans, and selling them to investors around the world has complicated the prospect of trying to renegotiate many distressed mortgages," reported the Pioneer Press.