Mediation Service Helps Borrowers Facing Foreclosure

Posted on January 14th, 2008 by saman

Attorney general Mike Thompson of Iowa Mediation Service recently talked about how the office received around 5,800 queries since the hot line for home buyers was launched back in September 2007. The hot line does not only entertain home buyers who are facing foreclosure, but also those who are weary of the risk of their properties being foreclosed. According to Thompson, about 600 cases are being worked on by a group of 14 full-time employees and part-timers at current. In the past few months, the office managed to solve about 100 cases.

The hot line was launched after a data in a report showed Iowa as one of the 10 US states with highest foreclosure rates. By launching the hot line, the office hopes to help troubled borrowers to be on the right track with their payments and reduce the risk of having their properties foreclosed. In short, the mediation office hopes to remove the state of Iowa from being included in the nations’ top ten highest foreclosure rates list as well as to help the borrowers who are concerned about their situations.

Home buyers who consult the mediation service rely on them to negotiate with lenders to get loan modifications. 100 loan modifications that have been successfully made were tailored for a longer-term. Lenders agreed to halt foreclosure and tack missed payments onto the end of the loan instead of demanding borrowers to make the payments on the spot. These successful negotiations would no doubt benefit the borrowers in the long run, giving them ample opportunities to not only secure their financial standing but also their ownership of properties at the same time.

Nevertheless, not all cases were resolved wonderfully and in a perfect manner. Thompson stated that some cases could only be patched for a shorter term. In a situation where loan modifications are only temporary, borrowers and lenders agree on a more affordable repayment scheme for six to 12 months to enable borrowers to catch up with any payments they might have missed in the past. After the period agreed by both parties, initial terms shall be effective again and borrowers will have to pay back the amount initially stated the first time around.

Cases can get ugly if the situation is tight from the very beginning. Some home buyers who sought help and consultations from the Iowa Mediation Service have even gone for a year or more without paying their big bills. The troubled borrowers only sought help after getting notices of approaching sheriff’s sale on their dwelling. Worst still, some of them did not seem to have made any effort to pay off their loan. They didn’t even bother to save a certain amount of money even for emergency cases such as this to make up for fast payments. It is strange that when no efforts were made to secure their properties, they still insisted on staying in their homes.

Additionally, Thompson said that there were also cases where home buyers kept being threatened by collection agents of the company that has agreed to make loan modifications. They were scuttled even though negotiations have been made and agreed upon. This situation further highlights Attorney General Tom Miller’s testimony before Congress in November. Miller testified that even though many solutions are being invented and provided, the country is still far from wiping off the problems of foreclosure from the surface. More loan problems are expected to come to surface this year following the increase in interest rates.