Proposed Mediation Law to Lower Number of Cheap Foreclosures in Utah

by on Foreclosure Help

Utah Representative Trisha Beck is planning to propose a law that will allow borrowers to have a face to face discussion with their mortgage lenders before a foreclosure process is started. The measure aims to lower the high supplies of cheap foreclosures in the state and prevent prices of homes from declining further.

According to Beck, most troubled homeowners are opting to just let go of their properties, resulting in thousands of Salt Lake City bank foreclosures and distressed properties in various areas of the state to drag the area's economy down. She added that the legislation will give borrowers a chance to request for mediation with lenders which could be a win-win situation for both parties.

The number of Utah foreclosures for sale is some of the highest in the nation, making Utah the sixth state with the highest levels of foreclosures among all U.S. regions. Supporters of Beck's proposed measure have stated that the bill will help lower the number of distressed properties in the area and will also help home prices to recover.

The bill is similar to the one that Nevada has implemented one year ago to cut down the high levels of cheap foreclosures in the area. According to housing reports from Nevada, in almost 70% of mediation cases, borrowers and bank lenders were able to come up with an alternative to foreclosure.

According to housing industry analysts in Utah, most owners of foreclosed homes for sale spend too much time waiting before taking any action, resulting in further declines in their home values. They added that in majority of foreclosure cases, values of properties decline by 50 to 60% before homeowners come up with a decision on what to do.

Under the proposed measure by Beck, lenders and borrowers will be required to pay $250 each for mediation service costs; a fee that is considered reasonable by the supporters of the proposed bill, particularly if potential losses through foreclosures are taken into consideration.

Mediation experts have supported the proposal, stating that borrowers and lenders should try to work things out to come up with a solution that will benefit both parties. They added that the measure will also result in fewer cheap foreclosures and will improve the values of residential properties in the state.

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