Delaware is still in a foreclosure crisis. For that reason Attorney General Beau Biden and state legislators announced plans to extend the state’s mandatory foreclosure mediation program for another four years.
The extension is for a package of bills which were passed in 2011 in an effort the help combat the state’s rising foreclosure rates.
Under the legislation, banks and borrowers can come together through mediation to work out a deal avoiding foreclosure.
“The biggest complaint, borrowers couldn’t get their servicing bank on the phone, has begun to go away because mandatory mediation requires the servicing bank to show up with resolution authority, to have a good faith discussion with the borrower,” said Biden.
Some of the resolutions include loan modification which means the terms of the loan change to make it more manageable, loan repayment or a forbearance agreement which temporarily suspends or reduces payments for a period of time.
Biden said the program has been very successful. He calls this a win-win for the banks and borrowers as well as the neighborhoods that foreclosures plague.
“The lender is better off because they now have someone continue to pay on the note because once they foreclose, they lose equity in that property that they own,” explained Biden. “And the neighbor of that borrower actually does better too because once their neighbor is foreclosed upon, the neighbor or in fact, the whole neighborhood loses between 20-30 percent of the equity in their homes.”
State Senator Brian Townsend, who was recently tapped as chair of the Senate Banking Committee, said banks also realize the importance of giving homeowners a second chance.
“As I came in as chair of the banking committee, I was encouraged to hear that the banks support this legislation as well and support the extension of the program,” said Townsend.
According to the state’s statistics, about 58 percent of homeowners facing foreclosure participated in the mediation process since it took effect in 2012 and of those, 80 percent we’re able to avoid foreclosure or continue to negotiate with the bank.
“In the system currently right now that are 250 working through the process of mediation, and 200 of those homes are on the verge, and will be successful with the mortgage modification program within the next couple of months,” said Rep. Helene Keeley.
While the number of foreclosures seems to be going down across the state, lawmakers agree that the extension would help homeowners and neighborhoods through the housing and economic crisis.
“We still have a ways to go,” said Townsend. “I think that the meltdown of the housing market and the economy, there are hardworking men and women who suffered from that. They were hardworking before, they’re hardworking now, and we have to come together on the issue of helping the transitioning families who are still able to make things work.”
Additional information on the foreclosure mediation program including upcoming workshops can be found at www.deforeclosurehelp.org