NEW YORK - A slew of state and local home foreclosure mediation programs have enormous potential to help homeowners, but most suffer from lack of industry accountability, according to a study released on Wednesday.

The nonprofit National Consumer Law Center, or NCLC, in a new review of 25 foreclosure mediation programs in 14 states, warns that there is no data to confirm that foreclosure mediation programs anywhere have led to a substantial number of affordable and sustainable loan modifications.

The NCLC found existing programs routinely fail to impose significant obligations on mortgage servicers.

Without the imposition of these obligations, it is unlikely that mediations will lead to fewer foreclosures, the report said.

The programs we considered often lack mandatory rules and fail to impose sanctions for non compliance with what minimal rules exist, the group said.

They also do not require servicers to provide information substantiating a right to foreclose and do not mandate analyses of loan modification alternatives, with many setting unreasonable procedural barriers that restrict large numbers of homeowners from participating, according to the NCLC.

The report, State and Local Foreclosure Media Programs: Can They Save Homes?, reviewed foreclosure mediation programs in California, Connecticut, Florida, Indiana, Kentucky, Maine, Michigan, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon and Pennsylvania. Many programs shared common problems.

The report's author, NCLC staff attorney Geoffrey Walsh said under most of the existing foreclosure mediation programs, servicers have all the discretion and homeowners have little or no power.

If the programs continue to demand little or no accountability from servicers, they will likely go the way of federal efforts to control foreclosures that have failed as a result of relying on voluntary compliance by the lending industry, Walsh wrote.

It is unfortunate that the industry has so far prevailed in blocking Congressional action on court-ordered loan modifications, the one step that would level the playing field for consumers and ensure the necessary accountability from all parties, he said.

With the industry's encouragement, crucial elements of accountability have been omitted from the Treasury Department's Home Affordable Modification Program (HAMP). Now, over six months after its inception, this new federal initiative serves only a small percentage of eligible homeowners, the report said.

In the report, the NCLC said their review of the status of foreclosure mediation programs has shown there can be a danger in viewing them as an alternative to legislation that directs servicers and mortgage holders to make affordable loan modifications.

For example, bankruptcy code amendments allowing courts to modify mortgages through reduction of principal would markedly increase the numbers of affordable modifications, the report said.

Federal legislation setting out clear directives for enforcement of the HAMP program would be far more effective that expecting state and local mediation systems to oversee enforcement of this federal program, the report said.

(Reporting by Julie Haviv; editing by Padraic Cassidy)

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