Though the housing market is still improving, albeit rather slowly, many consumers live under the threat of foreclosure or have already suffered this type of action. However, more states are now turning to a process that proponents say allows more homeowners to keep their property.
A number of states across the country have now adopted various types of foreclosure mediation as a means of helping consumers in dire financial straits to stay in their homes, according to a report from the Salem Statesman Journal. The latest state to adopt this type of system is Oregon. Lawmakers in the state believe mediation and housing counseling would be able to help some 10,000 residents remain in their homes.
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“It is now clear that these measures have worked,” a report from the National Consumer Law centre in February said, according to the newspaper. “Foreclosure mediation and conference programs can save homes from foreclosure.”
One of the earliest such states to adopt this practice was, perhaps not surprisingly, one that has been plagued by more foreclosures since the housing meltdown than any other state, the report said. Nevada’s program began in 2009, and between September of that year and the end of last year completed more than 15,000 mediations. The vast majority – 82 per cent in all – have ended with no foreclosure either because the lender and borrower reached an agreement, or because the lender didn’t comply with regulations.
Of course, every case is different, but experts say that any way consumers can avoid having their homes foreclosed upon is helpful to both bank and lender, the report said. The reason the lender benefits is obvious: they keep their home when they otherwise might not have without the help of the mediation process. And for lenders, there are significant costs associated with foreclosing upon a home that can be difficult to bear, especially in states where the foreclosure problem is widespread.
Consumers facing foreclosure but living in states where there is no mediation program may be able to find help in other ways, such as by seeking the help of federal programs designed to aid troubled homeowners in dealing with seriously delinquent mortgage debts. However, experts have also criticised those programs as being too difficult for many borrowers, even especially troubled ones, to qualify for.