The recent crisis in the mortgage industry has resulted in an increase of loan defaults and foreclosures. This stems from the fact that many homeowners took out loans with low interest rates, but for short terms with a balloon payment to be re-financed. As those balloon payments are coming due, the refinancing is not being done at rates which the homeowner can afford. Other homeowners have mortgages that had low adjustable rates (ARM) early on in the loan, but then shifted to higher rates as time went on. These lead to defaults on mortgages which is followed by foreclosure.
Mediation may be a good way to find a winning situtation for both the lender
and borrower. By the time a foreclosure suit is filed, a homeowner has been
in default for several months. Experts say that at that point, a homeowner usually is resigned to losing the house and doesn’t hire an attorney, or can’t afford one. At the same time, lenders are not in a rush to foreclose on homes in a down market.
Foreclosures have reached an all time high in the third quarter of this year. The court system in Ohio is strongly urging mediation in these cases to stem the crisis.
If you’re faced with foreclosure, try to negotiate a new arrangement with the lender. If you can’t, try mediation. Feel free to contact me for more information.