There is a private-sector solution to rising mortgage delinquencies that already has proven its success. It can work today for you. It has worked in hundreds of other cases where people have saved family homes. It is called Foreclosure Mediation. One might ask: What is Foreclosure Mediation and what are the benefits? How can you do it and when? What does it mean for me and my family? What does it mean for me as a lender?
Here is why Foreclosure Mediation is good for banks and good for homeowners. First, let’s consider what happens when a bank forecloses on a property. It can cost the bank thousands of dollars in legal fees. Meanwhile, redemption laws may allow the homeowner to continue to live in the property without paying the mortgage for at least six months and in some cases longer. So the bank is potentially out that money in monthly mortgage payments. This occurs while the homeowner stresses and scatters to find recourse.
Following foreclosure the property is vacant. The pipes freeze. There could be vandalism. The homeowner’s credit is shot. The costs to the bank continue, not to mention the impact on neighbors. Then the bank sells the property, if it can, at a loss, because of all the other foreclosed houses in the neighborhood. In a bad market, the bank could be eating tens of thousands on the deal. The result is terrible for the bank, and worse for the homeowner, who with children in tow is left out on the street and in the cold. How does this strengthen society? It doesn’t.
A mediated settlement can address the interests and needs of the homeowner and financial institutions alike. Here are just a few options of many that have come out of banks and homeowners sitting down and talking in mediation:
Any of these solutions could cut the bank’s potential loss considerably — and they would leave the homeowner with some dignity and options. The beauty of mediation is that it allows the burden of the mistakes to rest on the shoulders of the banker and the homeowner who got into this problem together and now will get out of it together.
A mediated settlement usually takes a half a day to a day of work or less. The mediated agreement would then be drafted into legal agreements. The result: Financial institutions get payments while homeowners weather the crisis, have roofs over their heads and keep their children in their same home.