By: Lance Denha, Esq.
Faced with the potential of foreclosure, many homeowners are turning to legal mediation. Ever since the housing crisis of 2007, homeowners across the nation have lived with the reality that foreclosure is more prevalent now than ever before. Even as the market makes tenuous strides toward recovery, many homeowners remain afraid that an inability to make payments will result in the loss of their cherished property. As you may know, there are legal alternatives to foreclosure, some of which might enable homeowners to reach more satisfying solutions that do not entail the loss of their home. One such alternative to foreclosure is that of a legal mediation—which may or may not prove effective, depending on the specific situation the homeowner faces.
Legal mediation comes with noble intentions—namely to put borrowers, lenders and an impartial third party in the same room to negotiate a way to help owners keep their homes– or get out of them as painlessly as possible. Mediation can be extremely promising even if it does not result in positive action for each and every client.
While the success of a mediation attempt is somewhat dependent on local regulations and access to legal counsel, there are further steps that a homeowner can take to improve his or her chances of a positive outcome. Being well equipped with the proper documentation and understanding of the mediation process will only help assist the homeowner in avoiding foreclosure.
In Michigan, for instance, there are increased disclosure requirements from banks and lenders to borrowers who are facing foreclosure, including the lender who needs to provide the phone number and name of a bank representative with the authority to negotiate and modify the loan. In addition, a mechanism to set up meetings and foreclosure mediation sessions between the homeowner and the lender is now in place for the primary purpose of negotiating mortgage modifications. If a borrower does decide to request a meeting, the foreclosure cannot proceed until 90 days after the initial notification occurs. The borrower can also request mediation during the foreclosure process.
Despite signs of economic recovery, the foreclosure crisis is likely to continue and still only midway through its cycle. While real estate markets are beginning to stabilize, part of that stabilization process involves banks clearing out their distressed properties. In many instances, this means foreclosure. The foreclosure process can last years due to the fact that many of our nations courts are backlogged with foreclosure cases. This means simply because your case hasn’t come up doesn’t rule out the possibility of a foreclosure action. It is still an ever-present reality for many American homeowners. This calculated mediation plan instituted by federal and local governments provide an additional avenue for borrowers and lenders to reach an amicable resolution as an alternative to a long foreclosure process.