Homeowners in foreclosure now get mandatory mediation

Mandatory mediation for foreclosures is now a reality in Delaware – at least for the next two years.

Jerry Kelly of the Delaware Attorney General’s Office spoke at the Sussex County Council meeting on Tuesday about the new mandatory mediation program. Kelly said there were about 7,000 foreclosures in the state last year and another 15,000 to 16,000 are “ready to go” now. Delaware has seen more than 25,000 foreclosure filings since 2007.

Attorney General Beau Biden’s office and legislators produced a package of bills, passed during the last legislative session, that aimed to address Delaware’s foreclosure crisis by strengthening the state’s existing voluntary mediation program in several key ways:

• Mediation is no longer voluntary. When a bank files a foreclosure complaint, the law now requires that lenders and borrowers sit down one-on-one and have a meaningful conversation about a payment plan or other options before a foreclosure can proceed.

• It eliminates the income qualification for homeowners seeking mediation.

• It establishes a filing fee, paid by the lender, to fund the program.

• It extends the time a homeowner has to respond to a foreclosure complaint. Previously, homeowners had 20 days to respond to a foreclosure complaint. Under the new program, the foreclosure process is put on hold when a mediation conference is scheduled, and a lender cannot seek judgment until after the mediation conference takes place.

The mandatory foreclosure mediation program serves Delawareans who own a home containing one to four units, who reside in that home as their primary residence and whose mortgage has been foreclosed upon on or after Jan. 19, 2012. The program runs through January 2014.

“There are so many new programs,” Kelly told council members. “And we want to reach out to your residents.”

Kelly said data shows that the sheriff’s sales at which foreclosed homes are sold have increased in the state from 269 in 2008 to 609 this past year, with the majority of the ones in Sussex County being in the Millsboro ZIP code (19989). Seaford followed in the number of sheriff’s sales, with 71, then Laurel with 56, Lewes with 51 and a combination of Milton/Rehoboth Beach and Dewey Beach having 37.

He said many people don’t know that they can file an emergency bankruptcy – which costs about $100 – to stop a sheriff’s sale. It is information like that that the office can offer when speaking to people who are facing losing their home and who need answers.

He said 30 percent of foreclosures in Sussex County are against second-home owners, and while they do not qualify for this program, there is help available for them also.

Kelly said the main purpose for him and his office is to “calm families down.”

“Families are breaking up because of the financial situation, and we want to help bring the temperature down. There is hope for people to get together and to resolve issues. There is free help.”

He went on to say that a lot of money has been lost nationwide, but it doesn’t have to spell disaster.

“The U.S. has lost a trillion dollars in home equity — but that’s money, it’s not family. We don’t want families to be broken apart.”

Kelly warned that there are also many scams out there and that people should never pay an upfront fee to get help for themselves and their mortgage situation.

He thanked the County for its assistance in getting the word out. He also thanked organizations such as First State Community Action and NCall Research, saying the only way to do it right “is through partnership.”

Under the new program, eligible homeowners will be provided with detailed information about the foreclosure mediation program when a foreclosure is filed against them. Homeowners can learn more about the program by calling the Attorney General’s Mortgage Hotline at 800-220-5424, e-mailing mortgage.mediation@state.de.us, or visiting www.attorneygeneral.delaware.gov/mortgageforeclosure or www.deforeclosurehelp.org.

Kelly also said people can call him at (302) 577-5092.