It is said that time heals all wounds. But when it comes to the foreclosure system, adding time to the process isn’t helping – it’s only drawing out the pain.

According to Sheila Dillon, housing advisor to Boston Mayor Thomas Menino, giving borrowers and lenders more time to arrange an alternative to foreclosure – including mandated 90- or 150-day right-to-cure periods – is largely ineffective. Absent any guiding principles or required mediation, Dillon said, too often lenders simply wait out the period without engaging borrowers.

Dillon spoke last night at an event sponsored by the Harvard Kennedy School’s Rappaport Institute for Greater Boston. She was joined by Federal Reserve Bank of Boston Senior Economist Paul Willen.

Time is a greater enemy in the foreclosure process than initially imagined, Willen said. Prior efforts at tailoring the foreclosure system to meet the needs of the current environment have largely focused on building more time into the process. The idea was to give delinquent borrowers more time to find the funds necessary to cure, or to give borrowers and lenders more time to work out a non-foreclosure alternative.

But leaving seriously delinquent borrowers in their homes for months or years while their cases languishes in the foreclosure process has a worse affect on home values and overall neighborhood values than a quick foreclosure, Willen concluded.

Willen – who emphasized his views and conclusions were not necessarily shared by the Federal Reserve – said traditional foreclosure law and the judicial foreclosure process had always been written to protect homeowners’ equity.

But because those most at risk for foreclosure today almost never have any equity, the judicial foreclosure process is protecting something that doesn’t need protecting, Willen said. So instead of protecting borrowers, judicial foreclosures simply add to the time it takes to foreclose on a seriously delinquent borrower.

Willen found that the rate of cure for troubled homeowners in judicial foreclosure states and those in non-judicial, power of sale states is essentially the same. In judicial states, the same fraction of homeowners eventually ends up losing their homes, but it takes longer.

In non-judicial foreclosure states, lenders often "pick off" those homeowners least likely to cure in the first few months following serious delinquency, leaving a pool of borrowers more likely to cure over the long-term.

But, echoing Dillon, Willen said that unfocused, largely arbitrary right-to-cure periods in non-judicial states were ineffective on their own in achieving non-foreclosure resolutions.

Dillon said a potential fix might come in the form of legislated mediation periods, rather than simple waiting periods, that could be used as a tool to bring lenders to the table. She said Boston brought a home rule petition before the statehouse asking to implement such a system. No action has yet been taken.

Dillon also said she hoped some of the funds from the recent mortgage settlement reached by the 50 state’s attorneys general and large mortgage servicers could be used to implement stricter counseling programs with more clearly defined goals.