Few distressed homeowners have participated in Connecticut’s bank foreclosure mediation program despite the high success rate of the initiative.
The state’s mediation program was part of the comprehensive mortgage relief law initiated in Connecticut last year. The mediation program allows troubled borrowers to meet with their lenders to workout solutions to avoid foreclosures and make their accounts current.
By the end of May, the total foreclosure mediation cases completed across the state reached 2,932. Out of these cases, 1771 or 60 percent have successfully reached settlements which allowed families and individuals to remain in their properties.
According to data released by Connecticut’s judicial department, 41 percent or 1,224 homeowners who were able to avoid foreclosure received loan modification option from their lenders.
Furthermore, 397 homeowners chose to leave their distressed properties but worked out an agreement with their lenders which allowed them to pay off the balance of their loans either through deed in lieu or short sale. Unsettled mediation cases totaled 764 or 26 percent of the total numbers completed in May.
Industry analysts noted that despite the success of the state’s mediation program, only 35 percent or 6,575 of the 18,702 eligible borrowers have actually taken advantage of the initiative. Analysts said that the low rate of participation may be due to the lack of awareness of distressed homeowners about the state’s mediation program.
But state lawmakers are hopeful that the trend would soon change, expecting a dramatic increase in participation rates after they have passed a law making mediation mandatory for all foreclosure cases filed after July 1.
Bank’s committee co-chairman Senator Bob Duff is hopeful that the mandatory mediation legislation would benefit more distressed homeowners and help lower the foreclosure rate in Connecticut.
Industry analysts said that the state’s mediation program will benefit everyone starting with homeowners who will be given a chance to remain in their properties while lenders and banks will avoid the cost and trouble of the foreclosure process.
Additionally, communities will be spared from property value declines and prevent the rise in crime which are common in areas with a high number of abandoned and vacant, foreclosure homes.
Meanwhile, the state government also offers two foreclosure prevention programs for distressed homeowners. The first is the Emergency Mortgage Assistance Program (EMAP) which provides fixed-rate mortgages to homeowners at risk of losing their properties to foreclosures.
Another is the Connecticut Families program which so far, has provided over $20 million funds to financially strapped families in the state.
Author Resource:-> Original Post: Avoiding Bank Foreclosure Through Mediation in Connecticut on BankForeclosuresSale.com.
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