With foreclosures at close to record highs, local and state governments around the country have tried to intervene to both make sure banks aren't taking shortcuts and to help keep people in their homes.

New York State has one of the most aggressive efforts, mandating that homeowners and banks meet regularly under court supervision. The idea is simple: Banks and mortgage servicers have often done a poor job communicating with homeowners, and if the two sides are forced to sit down, there may be fewer foreclosures. Banks can proceed with foreclosure only if the court finds the two sides can't reach a resolution.

A new report looking at New York's efforts found that the mandatory conferences, refereed by court officials, have delayed foreclosures as tens of thousands of homeowners remain in prolonged negotiations with banks. In the small number of cases that have finished the conferences, homeowners have frequently avoided foreclosure and received loan modifications.

At a congressional hearing on Tuesday, the National Consumer Law Center's Diane Thompson pointed to the New York settlement conferences as a promising effort to keep people in their homes.

"If you can get the servicers into a program where they are forced to focus on that particular loan and get it out of the automated processes, you are very likely to avoid many foreclosures and reduce the numbers dramatically," Thompson told the Senate Banking Committee.

New York's program has been far from a complete success. Banks have been slow to sign off on settlements, according to Paul Lewis, the court official overseeing of the program. "For one reason or another, the finish line keeps moving," he says. "The ability for the referees to say ‘enough' is limited." Initially homeowners were unprepared for the meetings too, but the court's outreach efforts have improved the situation, Lewis says.

The conferences could add another year, on average, to New York's already slow foreclosure process. Homeowner advocates and some government officials say slowing down the process provides time to fight wrongful foreclosures as well as forestalling a flood of the housing market at a time when prices are already so low.

Banks, investors and some economists say such long foreclosures leave homeowners in stressful limbo and just delay the inevitable, prolonging the housing crisis while allowing homeowners to live rent-free for months on end. New York is now the slowest state in the country at processing foreclosures; the average New York homeowner in foreclosure is 600 days behind on their loan, according to data from Lender Processing Services.

The report said the average case takes from four to eight separate meetings to reach a conclusion. The result has been taxing on the court system, which oversees the process, according to the annual report on the program submitted by the state's chief administrative judge.

Responding to the housing crisis, in September 2008 the New York legislature passed a bill requiring that the conferences take place before judges would allow banks to foreclose on certain subprime borrowers. Typically a court-appointed official referees the conferences and brings in judges as necessary. The program expanded in 2009 to include all one- to four-family homes that are primary residences.

Since then, the courts have been inundated. There are around 80,000 outstanding foreclosure cases, but this year there have been only about 4,000 settlements. The vast majority of cases are still unresolved.

About 20 percent of eligible homeowners don't show up to the conferences. Of the conferences that do reach a conclusion, Lewis says about half go on to foreclosure while the other half result in a settlement, usually a loan modification. Sometimes the settlements still require homeowners to lose their home but in ways that reduce the costs and the credit damage associated with foreclosures.

In the New York City borough of Queens, for example, 54 percent of the completed cases this year avoided foreclosure. The court covering several suburban counties outside of New York City had similar results, according to Lewis.

The foreclosure process continues as usual for commercial properties, homes that aren't owner-occupied or residences where the homeowner does not show up for the conferences.

In most of the mediations, the banks evaluate homeowners for the government loan modification program, which reduces monthly payments to 31 percent of a borrower's income. But since the government program is an agreement between the federal government and the banks, the state court has little leverage to deal with any problems they may see with banks' implementation of the federal program. If the banks say the homeowner doesn't qualify for a government modification, they are supposed to see if one of their own, proprietary modifications could work. We've found in-house modifications typically provide less help.

Lewis says when the conferences first started, homeowners were not prepared for the meetings, so the court has been working with housing counselors and legal-aid attorneys to get homeowners to go through an initial screening a few weeks before their first conference date. The screenings help homeowners prepare their paperwork in advance.

Through the screenings and other outreach efforts, the settlement conferences have helped engage more homeowners in the foreclosure process. Previously, 90 percent of homeowners did not challenge or fight their foreclosure notices at all; the conferences brought that rate down to 20 percent.

But nearly two-thirds of homeowners don't have attorneys or advocates, which contributes to the stress on the courts. The report says the lack of representation is one of the program's "great challenges" because the burden has instead shifted to the judges and court officials to explain the process and help homeowners as much as is legally possible.

Nationwide, over 25 programs have created venues for this communication between banks homeowners—everything from mandatory negotiations overseen by courts to giving the homeowners the option to request unmediated meetings with their mortgage servicer. As recently as last week Washington, D.C., approved a new program.

In her congressional testimony, the NCLC's Thompson said in order for the efforts to be effective, there needs to be funding for legal help for homeowners in mediation programs. The Dodd-Frank financial reform bill authorized $35 million for legal services, but Congress has yet to appropriate the money. "We urgently need that funding," Thompson told the Senate Banking Committee.