Justice Department and HUD Urging Mediation to Bring Down Foreclosure Numbers
The Justice Department together with HUD is urging mediation through a third party so as to bring down the number of foreclosures. The argument is that it has proved to be effective in the states and the municipalities where it has been applied.
In a minimum of fourteen states, 25 similar programmes have been set up as per reports from two government departments. It claims that that 70% to 75% of the cases have been successful and 60% of the borrowers who have participated have been able to continue to stay in their houses.
Nevertheless not all the programmes are meeting with such high rates of success. A report focuses on some features that are common with the successful ones. The deploying of housing counselors who are trained and pro-bono lawyers as mediators have proved to be especially fruitful. It gives encouragement to the states and other entities to take up this angle of approach in their attempts to bring down the number of foreclosures.
The report observed, “Jurisdictions around the country are increasingly offering mediation programs as an opportunity for lenders and homeowners to reach mutually agreeable and beneficial alternatives to foreclosure”. It added that programmes involving mediation have the potentiality to bring down the default numbers that ultimately lead to foreclosure. It increases the possibility of renegotiating terms of the mortgage and when nothing is possible then it facilitates the graceful exit of the house owners.
For those who find it impossible to keep their homes the other alternatives are short sales or opting for deed-in-lieu of foreclosure that offer better terms for the house owner than outright foreclosure; the losses of the lender remain minimal.
The judicial areas included in foreclosure mediation plans are inclusive of Florida, Illinois, New Hampshire, Milwaukee, Wisconsin and New York City. In some regions like Nevada, Rhode Island, Providence mediation is compulsory prior to foreclosure.
Generally it is the retired judges who oversee the foreclosure mediation programmes. According to the report mediation assists in lowering the weight on the legal expenses by seeing to it that only the cases that are most difficult finally find the way to the courts.
HUD said it is offering guidance on how neighbourhoods can make use of grants sanctioned by Community Development Block to finance counseling programmes that can be linked with foreclosure mediation. Simultaneous webinar is being launched by it to focus on the strategies that can be employed and resources made use for the benefit of the house owners, counselors as well as the mediators.
