Mediation to Control Spread of Bank Foreclosure Homes

by Donald Hanz on Stop Foreclosures

Loan modifications could have helped control the spread of bank foreclosure homes in Maine if only troubled homeowners could reach lenders easily and on time to save their properties from foreclosures.

As such, many distressed homeowners complained of the difficulty of reaching lenders to alter their loans into affordable rates. The Maine Legislature stepped in and offered mediation for parties involved. The mediation program will officially start on January 2010. But a trial run is set at Sanford’s York County District Court where foreclosure rate is at the highest.

York County Community Action Program home financing counselors helped explain to distressed homeowners about how to use the mediation program to save their houses from becoming bank foreclosure homes. Counselors said that homeowners have the right to demand a mediation if they think that, given reasonable amount of time, they can make their mortgage payments.

So far, the mediation program in Maine has five judges who volunteered to act as mediators. Many homeowners liked the program, especially of having a third party join in negotiations with lenders. They said that they were having difficulty negotiating with banks and mortgage lenders on their own that having someone to mediate for them is a relief.

Some homeowners said that they were trying to make arrangements with their lenders to pay partial amounts. But their lenders rejected their offer, saying that if homeowners want to make their accounts current, they have to pay the whole overdue amount, plus interest and fees.

Under the mediation program, troubled homeowners and their lawyers have a half-day time, face-to-face discussion with their lenders. This is a welcome change to many homeowners who have given up hope of ever meeting with their lenders.

One of the groups involve in the program is the Maine Volunteer Lawyers Project. Its members have been providing free legal services to homeowners at risk of foreclosure. They said that many distressed homeowners have heard about government programs that could help them save their properties from foreclosures. The problem is, they could not find someone that would help them go through the process.

Maine law requires all lenders filing foreclosures in the state to join the mediation program or face sanctions, including case dismissal and barring.

Industry experts said that it is in the best interest of lenders to work out solutions with homeowners because having too many bank foreclosure homes on their inventory could be more costly for them.