Not many takers for Delaware foreclosure prevention program

Only five people have taken advantage of Delaware’s mortgage foreclosure mediation program, even though about 6,000 homeowners are expected to have their homes foreclosed in the state this year.

In response to the spike in foreclosures in Delaware, state leaders created the Foreclosure Mediation Program designed to get borrowers who were behind on their mortgage to sit down with their lenders in hopes of reworking their loan and saving their home.  But since the program was announced in August, only five borrowers have taken advantage of it.  The state is averaging about 500 foreclosures per month.  Delaware is on track to record 6,000 foreclosures this year.

One of the program’s supporters, State Representative John Kowalko (D- Newark South) says a flier detailing the program is sent to homeowners along with foreclosure notices.  But he says it’s not clear why more people aren’t applying for the program.  He says they could be afraid that the program is a scam.  For people facing foreclosure, he says, “There’s a certain instinctive aversion.”  That’s why the flier announcing the program was created to look as official as possible.  “We tried to reassure people that this was not one of those fly-by-night scams.”

To give the program more legitimacy, there had been plans to have volunteers make in home visits with those facing foreclosure, to present the options in the program.  That door-t0-door awareness effort was to be primarily done by ACORN.  Those efforts were undermined earlier this fall as ACORN came under scrutiny following a hidden camera investigation at several offices that showed ACORN workers telling clients how to evade the law.  As a result, some of ACORN’s federal funding was cut, and that hampered the local branch’s efforts to get homeowners facing foreclosure into the mediation program.

The mediation program gives homeowners 15 days to contact a mortgage counselor and work out 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.  The new payment plan must meet certain requirements.  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%.

To find more information about the foreclosure help for Delaware residents, go to DEforeclosure.org.