What is foreclosure mediation? It’s a program which has been implemented in several US states, following the housing crisis, which aims to help borrowers keep their homes or leave them as painlessly as possible.
The idea behind foreclosure mediation is that by putting the borrower, the lender, and an impartial mediator in the same room, it’s often possible to reach an agreement to either modify the payment terms so the borrower can bring it current, or to agree on a way for the homeowner to leave the property without going through foreclosure. For example, a homeowner who cannot possibly bring their mortgage current might be able to work out an agreement for a deed-in-lieu of foreclosure (where they voluntarily sign over the property to the lender) or a short sale (where the lender agrees to allow the homeowner to sell the home on the market for less than the remaining amount of the mortgage).
Foreclosure mediation programs in the US have been somewhat controversial, with lenders arguing that their own programs are more effective and borrower advocates saying existing state-mandated mediation programs do not have enough “teeth.” Borrower advocates say the programs need to require mortgage companies to show they are negotiating in good faith, and the programs must be enforceable by state court judges.
Options for Avoiding Foreclosure in Canada
Foreclosure mediation is not widely used in Canada. Homeowners can and should still contact the lender and attempt to work out the problem, of course — foreclosures are expensive and if the homeowner was late on their payments due to a one-time emergency then the lender may be willing to modify the payment schedule so the homeowner can bring the mortgage current.
If that is not an option, the homeowner’s only choice if they want to stay in their homes is to refinance. By paying off the current lender it is still possible to stop foreclosure. However, since many homeowners facing foreclosure have already poor credit, a mortgage professional may not be able to find them a replacement lender.
For these homeowners, we have developed a special program that connects them with alternate financing in order to stop foreclosure now. In fact, we specialize in finding ways to pay off the existing lender without selling the home.
The main way we do this is via our Refinance Buy Back program. In this program, we bring in an alternate source of funding to pay off the mortgage, and allow the homeowner to keep living in their home. Then, while the homeowner is getting themselves back on their feet, we coach them back to good credit health so they can exit the program and get a traditional mortgage within a few years.
A portion of the rent the homeowner pays during the “Refinance Buy Back” period is set aside for a down payment on a mortgage, and while in the program homeowners can still access up to 90% of their home equity.
To qualify, the primary criteria are a steady source of income and at least 10% equity in the home. If you fit these two criteria, contact us today to find out how we can help stop you from being evicted from your home — and how we can restore your credit so you will not have to worry about this again in the future.