ST. PAUL, Minn. (AP) -- A bill that would offer struggling homeowners mediation with their lenders has cleared a state Senate panel.
The Homestead-Lender Mediation Act is designed to help more people avoid foreclosure by giving them a chance to modify their mortgages or refinance.
But several representatives of the banking industry on Tuesday told the Senate Commerce and Consumer Protection Committee that the bill could end up restricting the flow of credit in the state and could possibly lengthen the foreclosure process.
They also pointed to President Barack Obama's plan that provides incentives for lenders to work with homeowners to modify mortgages.
But Sen. Linda Scheid, a Democrat from Brooklyn Park, says her bill would add teeth by forcing lenders to offer mediation before starting the foreclosure process.
(Copyright 2009 by The Associated Press. All Rights Reserved.)
