Iowa Attorney General Tom Miller is encouraging Iowans facing a home foreclosure to call a new toll free hotline…877-622-4866.
Miller says people calling the "Foreclosure Hotline" may be able to get some help to keep their home. The number will put Iowans in touch with Iowa Mediation Service, which will examine if a loan modification – rather than foreclosure – might be in the best interest of both the borrower and lender.
"They won’t do a formal mediation," Miller says of Iowa Mediation Service, "they will be more of a facilitator that will work with the company and the home owner to try and come to a restructuring of the loan that fits the interest of both."
Mike Thompson, Executive Director of Iowa Mediation Service, says his company played a similar role in the farm crisis of the 1980’s. He believes lenders have a lot to gain by avoiding foreclosures. "As soon as you take it to foreclosure, you reduce the value of that collateral," Thompson says, "and that’s not going to help the lending community. So, if we can find a way to keep everybody’s interest above board, I think we can find a way to make this work."
Thompson says his agency will be working closely with the Attorney General’s office to track down the lenders. Thompson says many of the lenders are not located in Iowa. Miller and attorneys general in other states have been meeting with mortgage service companies and investors to discuss ways to modify troubled loans, rather than foreclosing.
Miller admits convincing lenders to restructure a loan won’t be easy. "It’s just easier to send it to foreclosure," Miller says, "and another problem is it’s complicated to restructure a loan." A report from the Mortgage Bankers Association places Iowa ninth in the U.S. in foreclosures overall and fourth in sub-prime foreclosures.
Miller calls the Foreclosure Hotline a pilot project, with a startup cost of $4,500. That amount comes from payments made to Iowa by Ameriquest Mortgage Company in a recent settlement of a national consumer fraud case. Miller says if Iowans use the hotline, and it works, the program could be expanded.