All homeowners are dreading foreclosure. This process is the nightmare of every citizen, especially during difficult times. Luckily for you, there are ways you can stop foreclosure, and one of them is mediation.
If you are a homeowner struggling with finances, you are likely in danger of being late on your mortgage payments. This can happen to everyone, and even the best of us have bad periods in life. However, it’s important to do whatever you can to stop foreclosure and to prevent losing your house. Luckily for you, most states, including WI, offer various mediation programs that can help you get away from both situations.
Mediation programs can help you work together with the bank to try to resolve the problem. This program isn’t for everyone, and sometimes no matter how much you try your lender won’t agree to help you. However, it’s worth the shot.
What Is Foreclosure Mediation?
Foreclosure mediation is one of the tested ways to stop foreclosure. If you have fallen behind on your mortgage payments, you have likely heard someone suggesting this option for you.
During a mediation, the homeowner and the lender meet, together with the mediator. On this meeting, a homeowner explains their financial situation and the mediator tries to explore options to stop foreclosure and to make both the lender and the homeowner happy. Some of these options include a mortgage modification, repayment plan, dead in lieu of foreclosure, or a short sale. As you have noticed, some of these options mean that you will still lose your house, but at least you will get some more time and you may be able to save your credit. Organizing a mediation isn’t a certain way to stop foreclosure, but it can increase your chances of finding a good option that will work for you.
How Do You Start the Mediation Process?
If you decide to start a mediation process, there are certain program guidelines that your bank or the lender has to follow. Sure, the process varies depending on the program and the state law, however in most cases everything starts once the bank has initiated the foreclosure. Typically, when the homeowner gets a foreclosure notice, they will also get:
- Mediation program notice.
- Information about enrolling into the mediation program – in some states, enrollment is automatic.
- Contact information on HUD-approved counselors and other legal services that are available to you.
Who Pays the Mediation?
In some states, the government will cover the foreclosure mediation program costs. Others add supplemental charges to the fees that banks pay when starting a foreclosure. This will cover the cost of the program. There are, however, a few mediation programs that require the homeowner to pay at least a part of the mediation cost, but there are plenty low-cost mediation programs for people who can’t afford high fees. This is so that everyone can have a chance to try to stop foreclosure.
Is Mediation Successful?
It’s important to state that mediation process doesn’t force the lender in any way to help you stop foreclosure. In other words, even when the mediation is completed, you may still end up losing your home to the foreclosure. However, with it you will be much more likely to avoid foreclosure than if you opt not to try it. Also, some mediation programs are much more successful than others.
Even though there is no guarantee that the mediation will indeed stop foreclosure, it is a good idea to attend the meeting. This way, the bank will be more likely to agree on some painless solution. Not just that, but you might find out there are some loss mitigation options that you never realized you could qualify for. If all else fails, at least you have bought yourself more time to think about an alternative plan, such as a short sale of your home.
What If You Can’t Get Foreclosure Mediation?
If mediation isn’t available to you, or if you don’t want to pay for it, there are other ways you can work with your lender to stop foreclosure. You may be able to work directly with the lender and to reach an agreement about relief options. In fact, federal law states that the lender, in most cases, has to contact a homeowner who is behind on their payments to inform them that there prevention measures.
Are There Other Ways to Stop Foreclosure?
Mediation programs aren’t for everyone. Luckily, this isn’t the only way to stop foreclosure and save your credit. If all else fails, getting a short sale is typically much better option than a foreclosure. Also, if you are sensing that your financial struggles will lead you to falling behind on your mortgage, you may want to make a quick sale of your home. A lot of direct buyers will take your mortgage upon themselves, which will allow you to get rid of the house that is causing you troubles, while also saving your credit score. Giving away your old home isn’t easy, but if it has to happen make sure it’s on your terms.