What Happens to Temporary Loan Modifications Reached in Foreclosure Mediation?

Just Court ADR by Susan M. Yates,Jennifer Shack, Heather Scheiwe Kulp, and Jessica Glowinski.

A lot of the cases that go through RSI’s foreclosure mediation programs end with a temporary loan modification – a trial payment plan in which the homeowner pays a new mortgage amount for a few months. If the homeowner makes the payments on time and in full during the trial period, the homeowner and bank agree to make the modification permanent. This means that a temporary loan modification doesn’t necessarily mean that the homeowner has averted foreclosure. Because of this, I was interested to find out if homeowners in our programs were able to convert their temporary loan modification into a permanent one. Now that a significant number of temporary payment periods have come to an end, I have finally been able to delve into that question.

Unfortunately, cases are closed out from our programs once the homeowner and lender agree to a temporary loan modification. This means that we don’t know what happens with all those cases that leave the program with a trial payment plan. The data we do have comes from housing counselors who continue to follow up with the homeowners to be sure they make their loan payments and to help with the conversion to a permanent loan modification. This data points to successful conversions. In the 16th Circuit (Kane County, which has the most complete data of our three programs, 24 of 26 temporary loan modifications for which we have data have become permanent. In the 19th Circuit (Lake County), 8 of 11 have. There is no data for the 17th Circuit (Winnebago and Boone counties).

If you’re interested in the statistics from the Illinois Attorney General-funded foreclosure mediation programs, the latest report is now available.


Jennifer Shack

Jennifer Shack is Director of Research at Resolution Systems Institute (RSI), a Chicago-based nonprofit working to improve access to justice through court alternative dispute resolution (ADR). Jennifer, who has been with RSI since 1999, is one of the foremost court ADR researchers in the field. She focuses on conducting complex… MORE >

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