The state of Nevada has been the hardest hit by foreclosures for the past five years. In an effort to bring some relief to homeowners in the area and revitalize the economy, homeowners and lenders are now in mediation. According to Thomas Qualls, mediation attorney for the homeowners, the banks have profited from the recession and are “digging in their heels” in the mediation. On the other side, the lenders' attorney Phil Silvestri says that the current topics are not productive.

Qualls' Case in This Civil Mediation

Many of the claims that Qualls makes involve ways that lenders have profited from foreclosures. He and other representatives of the homeowners, consumer advocates and real estate agents say that the banks are repurchasing mortgages for literally pennies on the dollar without actually decreasing the principal value of the mortgages they sell. Additionally, they claim that the banks are using federal bailout money to do this.

Their current push is for the banks to disclose just how much they are paying for the mortgage notes that they are buying. Also, they want banks to have a clear list of documents they will need from homeowners before contracts are signed and also show the data the bank uses to decide whether to foreclose or modify a loan. They argue that this would help homeowners decide whether they should keep on paying their mortgage or walk away from it.

The Banks' Side in the Mediation Services

According to representatives of the lenders, this requested information would probably not change how the mediation gets decided. According to mediation attorney Phil Silvestri, the banks are already doing what they can to work with homeowners, and the concept of the requested disclosure could give homeowners false hope for principle reductions. The lenders are reluctant to go down the road of principal reduction, saying that all homeowners would want them, and it could drive the banks to crash again.

This mediation is one for all homeowners and lenders to keep track of. The decision on disclosing the profit margins on mortgages, the possibility of principal reduction, and several other precedents that could be made could affect the real estate industry, and perhaps the entire economy.