Delaware homeowners facing foreclosure have a new tool to use as they fight to stay in their homes.
A new program unveiled by Governor Jack Markell (D) at the New Castle County Courthouse on Thursday allows homeowners to choose a court mediation process with their lender. It’s hoped that through mediation, loan terms can be reworked in order to prevent foreclosure. “It’s no secret. There are no winners in a foreclosure,” says John Olsen of the Delaware Banker’s Association. The association was one of a number of partners in crafting the mediation program.
Now, when notices of foreclosure are sent out to homeowners in default, a flyer detailing the new program will be sent out as well. The flyer will also be posted at the home along with the foreclosure notice. “It’s pretty blunt,” says Christopher White, Executive Director of the Community Legal Aid Society. The flyer provides basic details of the program, and provides the phone numbers of HUD-approved housing counselors in all three counties. “Our purpose was to get the attention of the homeowner, because quite often that’s very difficult.” The headline on the flyer: “You are about to lose your home to foreclosure.” The homeowner has 15 days after receiving the flyer to contact a mortgage counselor and workout a new plan to repay their mortgage. That plan would then be presented to the lender, which has the option of accepting the plan, or not. Previously, homeowners who were heading for foreclosure were pretty much on their own when it came to renegotiating a new payment plan.
The new payment plan must meet certain criteria. It cannot be more than 38% of the homeowners gross income. It can extend the term of the loan as long as 40 years, and the minimum interest rate is 2%. Mediation hearings will be held once a month in each county. The first hearings are scheduled for October 26 in Kent County, October 27 in Sussex County, and November 4 in New Castle County.
Delaware is averaging 500 foreclosures per month so far this year. That puts the state on track for 6,000 foreclosures this year. That’s three times the state average.
To find more information about the foreclosure help for Delaware residents, go to DEforeclosureHelp.org