New Law Would Allow More Protection In Homeowner Meditations

In recent years, the number of foreclosure cases in the U.S. has been increasing as many consumers struggle with high mortgage costs, credit card payments and other debt.

However, Sheldon Whitehouse, a democratic senator from Rhode Island, is introducing a bill that would clarify existing laws and allow more troubled borrowers to enter into supervised talks with their lenders.

"Servicers too often act in their own fee-driven interests and not in the interests of the investors who actually hold the mortgages," Whitehouse said at the hearing. "A court-supervised negotiation can ensure that servicers don’t reject reasonable settlements."

In addition, Whitehouse says the new programs would be similar to those currently used in bankruptcy mediation in Florida, New York and Rhode Island and could help many struggling homeowners get modifications that may have otherwise been rejected. This is because without supervision, many lenders will simply opt for a consumer to enter foreclosure rather than a modification to receive quicker payments.

Despite these benefits, some oppose the bill, fearing it could give too much power to the courts in deciding mortgage modifications.