To stabilize the housing market as quickly as possible, it is imperative that we keep as many homeowners in their homes as possible while speeding up the foreclosure and transition to new housing for those homeowners who cannot afford their homes even with modification. Foreclosure mediation achieves both of these positive outcomes simultaneously.
Foreclosure mediation is the last line of defense in foreclosure prevention when all the parties can meet and settle upon a loan modification that is both sustainable for the homeowner and nets the mortgage servicing company handling the mortgage for lenders and investors greater value than it can expect from selling the home at auction. And foreclosure mediation also is the first line of attack, speeding up the foreclosure process for those homeowners who simply cannot make their mortgage payments even if modifications were made. This saves mortgage servicers the cost and complication of lengthy foreclosures.
Foreclosure mediations are operating successfully in more than 20 state jurisdictions around the country. Those that are fully operational, such as those in Connecticut, Philadelphia, and Nevada, see settlements in well over half of their mediations, with a majority of homeowners keeping their homes. The same trend appears in every jurisdiction that implements a program, so we need more programs.
Moreover, the key to a successful foreclosure mediation program is homeowner participation. Inundated with often questionable offers for assistance from every direction, homeowners in foreclosure many times do not learn that mediation is available or question the validity of the offer. Thus, it is important that jurisdictions automatically schedule mediations for homeowners and mortgage servicers or lenders.
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