First making an appearance in Nevada, mediation services allow homeowners who are struggling to meet their repayments to have face-to-face meetings with their lenders and a third party to try to come to an arrangement that would allow them to keep their homes. One expert said of the mediation services: “Of all the legislation that I've seen pass, it seems to be the most effective in actually reducing foreclosures for a longer period of time.”
In addition to Nevada, around 14 states along with the District of Columbia now offer a mediation service for homeowners, and other cities and states are following suit. While the data on the effectiveness of the mediation services is still described as being patchy, the information that is starting to come out is showing that many homeowners are able to reduce their monthly repayments. This enables them to not only keep their homes but also to avoid defaulting on repayments.
In Connecticut there have been 12,805 mediations between 2008 and 2011. Over 50% of these resulted in homeowners being able to negotiate modifications to their loans, with 66% being able to remain in their homes.
One mortgage expert added: "Lenders welcome the opportunity to interact with the borrower and try to figure out what the best solutions are."
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