After losing her job as a teacher, Guernica Williams tried for months to get her bank to modify the mortgages on her Windsor Mills home. When her unemployment insurance ended in 2012 and she defaulted, she kept trying, leaving voice mails for a changing roster of case managers and repeatedly submitting documents.
In September, she met with a Wells Fargo representative at a court-administered mediation session, where she received assurances that the bank would review her loan, if she submitted additional documents. She sent the paperwork, then more paperwork, but a letter still arrived informing her that her house would be sold this month.
"I've done everything I was supposed to do and they either did not get back [to] me or they send me the same information back and forth," said Williams, 38, who lives at the home with her 13-year-old son. "It seems like they're playing a cat-and-mouse game."
A 2010 state law gave homeowners in foreclosure the right to mediation, a face-to-face meeting meant to stop the runaround many homeowners faced in dealing with lenders and the companies that service mortgages. But three years later, legal advocates and others say mediation has done little to help many troubled homeowners and that some of the practices the law was designed to stop still continue.
"They're more of a status conference than an actual negotiation or substantive discussion about ways in which a home can be saved," said Owen Jarvis, a staff attorney for the St. Ambrose Housing Aid Center who said he has worked on about 100 mediation cases.
Legislators intended for the law to push banks to consider alternatives to foreclosure. Before foreclosing on a home, lenders are required to sign an affidavit vouching that they have looked at other options and explain why they aren't possible. Administrative law judges oversee the session, acting as facilitators without the power to order resolutions or fact-finding.
"At its core, it seems like you should gauge the success of foreclosure mediations based on the number of homes that were saved," Jarvis said. "There are few cases, very few, in which I can say that it was because of mediation that a home was … saved."
Maryland's foreclosure rate was the third-highest in the nation in November, with nearly 4,000 foreclosure filings, or one for every 618 housing units, according to real estate information company RealtyTrac. That number is up 42 percent since this time last year and has risen year-over-year for the last 17 months, a reflection of a backlog of old loans now being processed, according to the state.
Since the mediation law went into effect, about 24 percent of eligible homeowners have opted to participate. In recent months, requests for mediation soared, to a record 519 in October, compared to between 100 and 150 a month after the law first passed, according to the Maryland Department of Housing and Community Development.
Of the roughly 9,000 foreclosure mediation cases closed through November, DHCD figures show that about 26 percent have ended in agreements between the homeowner and the lender, ranging from short sales to a commitment to review the case, pending submission of additional documents. The majority of what the state considers agreements — 1,648 out of 2,306 — are contingent resolutions, which require additional steps before an outcome is reached.
Homeowner advocates said contingent agreements often lead to more rounds of repetitive document exchange. Worse, they said, many lenders resist writing down the agreements and the foreclosure moves ahead, despite promises that an application for a loan modification will be considered. This resurrects the "dual-tracking" practice the state's law was designed to stop, they said.
"Overall it's been a huge help to homeowners, but there are some problems that we've seen that are really frustrating," said Cheryl Hystad, executive director of Civil Justice, a Baltimore nonprofit that provides low-cost legal assistance. "The real concern comes when the lender promises that they will take steps and they won't foreclose, and the next thing you know, they're foreclosing and they haven't done what they said they were going to go."
Hystad and others said they want to see the General Assembly or the state toughen up the mediation process next year, by adding provisions to require written agreements, even for contingent deals, and empowering judges to determine if banks are acting in good faith.
"The idea of mediation was we sit there, we reach an agreement, we write it down," said Vicki King Taitano, director of Maryland Legal Aid's foreclosure assistance project. "If you're going to make something work and work as it was intended to work, then it should work that way."
She said attorneys often can persuade the judge overseeing a foreclosure case to stay a sale, but it requires additional steps. If lenders and banks servicing the loans had to document the discussions, the move to foreclose would be less likely, she said.
"It's a waste of court resources, it's a waste of our resources and it's just horribly stressful for our client," King Taitano said. "It's … this big battle every time over something that is not necessary."
Maryland Bankers Association President Kathleen Murphy said she has received positive feedback about lenders' participation in mediation and had not heard complaints about unwritten agreements or dual tracking.
She said she would have to speak to members of the organization, which has worked with the state to address foreclosure, before taking a position about how contingent resolutions could be improved.
"My question is how widespread is this," Murphy said.
Tom Goyda, a Wells Fargo spokesman, said the company supports the mediation program, has helped train administrative law judges in mortgage servicing and is working with the state to make sure mediation is being implemented properly.
"We're committed to using the mediation program and every tool at our disposal to help customers avoid foreclosure when there is a viable alternative," he said.
A 2012 study by the Federal Reserve Bank of Boston found that 24 states and the District of Columbia had implemented some form of foreclosure mediation, with varying degrees of success. In Connecticut, which instituted foreclosure mediation in 2008, more than 12,800 cases have completed mediation, with 8,500 of the agreements allowing homeowners to remain in their homes. New Hampshire completed only 100 mediations, with all but 14 leading to foreclosure.
DHCD assistant secretary Carol Gilbert said her agency has been satisfied with the results of Maryland's mediation program, particularly since it is a last-resort option for homeowners who have already gone into default and been rejected for a loan modification.
"I'm not going to say it's the best we might expect, but I think it's surprisingly high considering how late in the game this process is," she said. "This tool was never meant as a magic bullet to save people from foreclosure. It was meant to make sure that lenders have thoroughly reviewed a homeowner's full set of options."
Mark Kaufman, the state commissioner of financial regulation, said he has heard complaints from advocates about Maryland's mediation program, and his office is looking at some of the issues.
He declined to comment on any potential regulatory changes, but said some of the concerns can't be fixed by his office because they go back to the way the legislature designed the program.
"We're always trying to look at it and make it more effective," he said. "The program has limitations by the nature of a mediation."
After a call from a Legal Aid attorney and the submission of more documents, Guernica Williams' foreclosure sale was rescheduled for January. She still hopes her loan will be modified, but said she is looking at her options, including filing for bankruptcy, in order to save her house.
"I'm determined to keep my house. I'm not going to uproot myself," she said. "Something's going to be done."