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A year ago, Nevada’s Foreclosure Mediation Law went into effect as a way to keep families in their homes by mandating mediation between lenders and borrowers who believed they could avoid foreclosure if the terms of their mortgages were modified.
Bankers and court administrators say the law is working, but some lawyers, consumer advocates and others say the mediations often are shams and that many lenders would rather toss a homeowner into the street than change terms.
“In effect, the Legislature told the lending industry, ‘come to the bargaining table and negotiate in good faith to modify these loans. If you don’t, the court will modify them for you,’” said Philip A. Olsen, a state mediator who said he was dismissed from the program because he recommended sanctions against lenders.
He said the way the program has been set up is contrary to the purpose of the law because courts don’t want to be in the loan-modification business.
The Nevada Supreme Court, which administers the mediation program, says the process is working.
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