Foreclosure mediation is proving to be a fruitful field for research. As part of the comprehensive evaluation I’m conducting of six foreclosure mediation programs in Illinois, I interviewed those involved in administering those programs. One of those administrators, who also is one of two mediators for a program in central Illinois, said he was seeing a difference in outcomes for cases based on the loan’s investor. Investor restrictions often dictate the outcomes that are available to homeowners facing foreclosure. Government-sponsored enterprises (GSE’s), Fannie Mae and Freddie Mac, have different restrictions than federal agencies, like FHA and VA. For example, FHA’s loss mitigation policies say that homeowners can’t be offered a loan modification if they had obtained one in the previous two years. The administrator believed those differences in outcomes was caused by the differences in regulations.
Testing his hypothesis seemed like a great research project to me. If the data does show differential outcomes caused by investor regulations, it might convince the agencies and GSE’s to modify their requirements for loan modifications. Luckily, RSI was set to collect the requisite information to test the hypothesis. Each of our programs currently uses or will soon be using a plaintiff’s checklist, where lenders provide detailed information about the status of the loan as well as who owns it. With this data, I’ll be able to conduct the statistical analysis needed to determine if there are differences in outcomes between investors and whether those differences are attributable to their regulations rather than differences in the loans themselves.