Entries Tagged as 'mortgage'

In NJ and your home is under foreclosure? Use free Mediation to help.

In January 2009, the New Jersey state government and courts implemented a foreclosure mediation program to help both homeowners and banks resolve outstanding balances on home mortgages.  A homeowner can ask the court to be entered into the voluntary mediation program at any time during the foreclosure process.  At that point, the foreclosure case will be stayed pending the mediation.  The home owner will be required to meet with a HUD-approved counselor, essentially to determine what the homeowner can afford in regards to a potentially modified mortgage loan.  After that happens, the court will schedule a date for a mediation between the homeowner and the bank.  The mediations are held at the courthouse.  Both the counselor and mediator are compensated by a fund established by the state of NJ.

In essence, as I’ve explained before, the bank does not want your home.  In most cases, the balance of the loan is more than the value of the house and the bank does not want to own a home in a bad real estate market.  While holding the home, they have to pay property taxes, etc.  They would rather settle — if it makes economic sense — than foreclose.  Loans can be modified in a number of ways (change of the balance due/prinicpal amount, payment schedule, interest rate, type of loan, etc.), all of which the counselor can assist the homeowner with.  The counselor is also required to be at the mediator to help the homeowner during negotiations.  The state and federal government as well as the FDIC, Freddie Mac and Ginnie Mae all have programs to help homeowners.

Please keep in mind that this is not a panacea.  Some mortgage loans have been resold and repackaged making modifications difficult or impossible.  Some homeowners, even after the numbers are run, simply cannot afford the home they are living in.  In the latter case, the mortgage company may pay you to leave the home without an expensive legal battle to have you evicted.

The NJ courts have published a foreclosure resource guide (opens in new window) to help homeowners navigate a complex system.  As I’ve stated before, the worst action you can take is to ignore all of the notices you get in the mail — doing nothing will surely lead to the loss of your home.  Also, be cautious of people or companies who want to help by transferring title on your home for any purpose.  Those are likely scam artists.

Facing Foreclosure on your home? There is a solution.

I have talked previously about how useful mediation can be if you’re facing foreclosure of your home. With the crisis in the mortgage market and the downturn in the value of homes, many banks do not want to foreclose on properties as they may not be able to sell it for more than the value of the outstanding loan. Because of this, many banks are interested in trying to re-negotiate mortgages and re-finance. Mediation can help get the bank and homeowner talking, bridge any gaps and can create a win-win scenario for the homeowner (who can keep their home) and the bank (who can keep a customer and revenue flowing in).

Some states have used mediation in this arena more than others. I’ve posted before about Ohio’s extensive use of mediation. You can read in interesting op-ed in the Minneapolis-St. Paul Star Tribune about a program in the mid 1980’s that forced delinquent farmers and lenders into mediation to save farms. The authors (one of whom is the president of the Association for Conflict Resolution) make a case that a similar program should be put in place for homeowners in trouble today. They argue:

In a bad market, the bank could be eating $40,000 to $100,000 on the deal. The result is terrible for the bank, and worse for the homeowner, who with children in tow is left out on the street and in the cold.

and further…

Here are just a few options when banks and homeowners sit down and talk:

•Lowered payments and extended payment terms to give borrowers time to get back on their feet.

•A temporary decrease in the interest rate.

•Deed-back leases, in which the bank takes ownership and the family pays a rent it can afford. If the economy improves, the family can repurchase the property.

•Helping the homeowner sell the property and forgiving the loss between the sale price and the outstanding mortgage in exchange for cooperating on a voluntary liquidation.

•An agreement that calls for the homeowners who default on a negotiated solution to leave the property immediately so the bank can resell it without the delay of foreclosure.

Any of these solutions could cut the bank’s potential loss considerably — and they would leave the homeowner with some dignity and options.

The beauty of mediation is that it allows the burden of the mistakes to rest on the shoulders of the banker and the homeowner who got into this problem together and now will get out of it together.

A mediated settlement usually takes a day of work or less. Cost to the bank: $1,000 to $2,000. (Mediated agreements would then need to be drafted into legal agreements by a lawyer.) The result: Bankers get payments — perhaps delayed, and perhaps less than what is owed — while homeowners weather the crisis, have roofs over their heads and keep their children in their same school. Everybody wins.

Again, if you find yourself in this situation and want to try mediation, give me a call at 732-963-2299 or contact me through my website. I am on the court roster of mediators for Superior Court in New Jersey.

Losing Your Home to Foreclosure? Try Mediation.

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.