Foreclosure Fairness Act of 2011 – Am I Able To Speak Directly With My Lender?
Federal aid has offered various programs via Making Home Affordable (MHA) to help American citizens all across our nation who are struggling through the recession. Although it has been helpful, foreclosures are still increasing leaving many in difficult situations. Acknowledging this widespread dilemma, several state governments have implemented a “Foreclosure Mediation” program that allows homeowners to speak directly with their lender to formulate an agreement on the issue of their delinquent mortgage payments. Is this a remedy option worth pursuing? Studies in Washington State have shown improvement in halted foreclosures.
This bill that the Washington State Legislature passed is called the Foreclosure Fairness Act of 2011. Seeing the staggering statistics of foreclosures in Washington which was over 132,000 foreclosed homes between 2009 and 2012, Washington decided to aid its citizens by funding HUD counselors to help distressed homeowners all throughout Washington. Through the HUD counselor or an attorney, the homeowner is able to request a foreclosure mediation where they are able to speak directly with their lender, with a mediator’s assistance (HUD counselor or attorney), to reach a “fair, voluntary, and negotiated agreement.”
Who qualifies for this program?
*For Washington Residence
Homeowners are covered if they are in owner-occupied properties and have either: (1) received a Notice of Default on or before the effective date of the Act and their house has not yet been sold at foreclosure sale; or (2) after the effective date, have not yet received the Notice of Trustee’s Sale. Any lender or servicer who did 250 or more foreclosure sales in Washington during the previous year is covered. The Act is effective on July 22, 201 1. The Department of Commerce will administer the Mediation Program.
Benefits to the Mediation Program
The main benefit of this program is reaching a consensus between the homeowner and the lender. The possible outcome may grant the homeowner:
- A loan modification which will reduce the interest rate and extend the mortgage period.
- An agreement to conduct a Short Sale which is selling the property for less than what the homeowner owes.
- A Deed-in-Lieu of foreclosure which is a voluntary transference of the deed to the mortgage company that has the homeowner’s loan.
- Cash for keys program which may provide monetary incentives for homeowners to vacate the home.
The other important benefit of this mediation program is if the lender agrees to participate, the homeowner is able to obtain an extra 45-60 days after the 15 days for the meeting to be approved and scheduled once requested. This act gives homeowners more time to figure out what the best move is to make when in danger of foreclosure.
How do I utilize the foreclosure mediation program?
The cost of using the mediation program is $200. If the homeowner qualifies, it can be obtained by speaking with a HUD approved counselor or an attorney who will send a request for mediation to the lender.
Will the foreclosure mediation program ACTUALLY be beneficial for me?
Click here to see if your state is participating in the foreclosure mediation program.
This mediation program has the potential to be beneficial. Lenders typically try to forgo the foreclosure process and are willing to work out a solution with homeowners. However, the results have been variable from state to state. Some states such as Florida have brought dismal results bringing only 4% of the referrals to the program ending in an agreement. The State of Washington have had better results having halted over 600 foreclosures in just 3 months after the program started in July.
If anything, the real incentive to use this program is the delay of the foreclosure process. It gives the homeowner more time to plan and make an informative decision for their home rather than being foreclosed on and evicted which could be emotionally and financially detrimental.
If you are in a position where you received a notice of default or are already in foreclosure, this may be an extremely helpful tool for you. I suggest you call a HUD counselor in your area immediately, even if you aren’t in default but struggling to keep up with your mortgage payments. If you live in Washington, I highly suggest you contact our short sale specialists to learn more about the process and consult with our certified distressed property experts as a short sale is in most cases, the best option for homeowners. Submit your information here and I will have our experts contact you within 24-48 hours.
Hope this helps