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Friday, April 23, 2021

Foreclosure Mediation Program Will Have Huge Impact

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Delaware is suffering from a foreclosure crisis. We see the empty homes every day in our communities, and hear from constituents who are struggling to keep a roof over their heads because of the national economic downturn.

 

A record number of Delawareans have lost their homes in recent years. Foreclosure just doesn’t affect the family that loses the home. The housing market in Delaware – and across the nation – has dropped significantly because of these foreclosures, and the collapse of the housing market has dragged the nation’s economy down with it.

 

The best way to move the economy forward is to reduce foreclosures, and the best way to attack the record number of foreclosures in Delaware is to ensure that homeowners and their lenders sit down and have a meaningful conversation about alternatives to foreclosures. Keeping people in their homes is not only critical to those families, but it has a positive effect on our communities too.

 

To guarantee those conversations happen, we worked with Attorney General Beau Biden to establish the Delaware Foreclosure Mediation Program. The program will officially launch later this month.

 

It used to be that a homeowner going through tough times could go to their local bank where they received their mortgage and talk about modifications that would keep them in their home – such as a lower monthly payment in exchange for extending the length of the loan. Changes in the mortgage lending industry have made those conversations at the local banks virtually impossible. In fact, homeowners who try to contact their lender often cannot find out which institution actually owns their mortgage, or if they can, cannot get through to someone with decision-making authority.

 

Under Delaware’s program, foreclosures will not be able to move forward until the lender and borrower have sat down and talked about alternatives to foreclosure. A housing counselor will monitor the mediation to ensure the discussions are in good faith, and the person representing the bank must be authorized to make modifications to mortgages.

 

This program will not be able to help every homeowner, but we know that a similar initiative in Philadelphia has proven very successful, with 85 percent of families who reached an agreement with their lenders still in their homes 18 months later.

 

Delaware’s program will be offered to homeowners once a foreclosure suit is filed against their primary residence in court. Homeowners who enter foreclosure starting January 19 will be notified of the automatic mediation program and provided a list of resources. Homeowners will want to meet with a housing counselor before the mediation conference so that they can make their strongest case to the bank. The counselors will lead homeowners through what documents they need to provide.

 

The mediation program is one of several steps we and Attorney General Biden took during the past legislative session to respond to the foreclosure crisis. Before homeowners get to the point where they would enter the mediation process, lenders must send them information on available assistance programs, because many times homeowners do not know help is out there to avoid foreclosure until it is too late.

 

We also established the Office of Foreclosure Prevention and Financial Education within the Attorney General’s Office. To protect homeowners who are vulnerable to foreclosure rescue schemes – in which a struggling homeowner pays someone who promises to help them avoid foreclosure but runs off with the fee – we passed a bill requiring the bonding and registering of mortgage modification companies and banning advance fees. If you think you may have been victimized by such a scam, call the Attorney General’s Mortgage Fraud Hotline at (800) 220-5424.

 

These bills were passed with large, bipartisan support in both houses of the General Assembly. Helping homeowners is not a partisan issue, it is not an upstate or downstate issue. The foreclosure crisis is hitting all areas of Delaware hard.

 

Giving homeowners an opportunity to reach an agreement to stay in their homes helps everyone involved. It is the right thing to do so people can keep a roof over their heads, and it helps the economy by keeping that family in their home and paying their mortgage rather than having a bank foreclose.

 

Helene Keeley (D-Wilmington South) is a State Representative from the 3rd district. John Kowalko (D-Newark South) is a State Representative from the 25th district. Bethany Hall-Long (D-Glasgow) is a State Senator from the 10th district. 

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