Five Tri-City families have avoided losing their homes to foreclosure thanks to a relatively new mediation process.
The Washington State Department of Commerce says the Fairness Foreclosure Program created in 2011 has already met the goal of reducing unnecessary foreclosures.
The Washington Legislature's main purpose was to make foreclosures more fair for homeowners, said Rick Torrance, managing director for the Department of Commerce.
"It's not just about saving homes," he said. But the program has had that result, changing how foreclosures are handled before they land in court.
In the Tri-Cities, the nonprofit Dispute Resolution Center is among the organizations doing mediation, said Paul Shelp, the center's executive director.
So far, the center has completed about seven mediations, said Tom Page, a board member and mediator. And three other cases are in the works.
The Tri-City organization also has partnered with Grant County's Columbia Basin Dispute Resolution Center.
Homeowners have the opportunity to meet with a lender's representative so they can get questions answered and understand why the foreclosure is happening, Torrance said.
Whether foreclosure can be prevented depends on the homeowner's circumstances.
Some borrowers might qualify for a lower mortgage interest rate, an extension on the time of the mortgage and, under certain circumstances, a reduction in the principal owed, Page said.
The program also can arrange a process called meet and confer, in which homeowners can meet informally with a lender's representative to try to reach a solution after being notified of their pre-foreclosure options, Torrance said.
If that does not work, and the homeowner receives a default notice, then the homeowner is eligible for mediation. Lenders who did fewer than 250 foreclosures the previous year are exempt from the mediation requirement.
Homeowners need to be referred to the Department of Commerce for the program by an attorney or a housing counselor. And the agency assigns eligible homeowners to a mediator.
Lenders who foreclose are charged a fee and most of the money goes to support the free counseling.
The number of foreclosures in the Mid-Columbia is lower than it has been on the west side of the state.
For example, in January 2012, four properties were foreclosed on in the Tri-Cities, which resulted in a foreclosure rate of one home in 23,000.
The statewide foreclosure rate is one home in 756, according to a Washington Realtors report.
Statewide, 3,350 homeowners have been referred so far to mediation, Torrance said.
Mediators make sure the lender and homeowner share information and reach a resolution.
While attorneys and private mediators also can mediate under the new law, the fee limit is $200 from the homeowner and $200 from the lender, Shelp said. That helps cover operating costs for the dispute center, which has all volunteer mediators.
Preparing for a mediation session can take 15 to 20 hours, Page said. It's a very involved process, requiring homeowners to update their financial information and lenders to provide details about the mortgage.
The actual mediation takes up to two hours.
"Our experience is that the lenders are coming to the table not only well-prepared, but they are coming to the table looking to find a way to keep these folks in their homes," Shelp said.
"It is a tremendous boost to the homeowner to finally be able to sit down across the table and talk to a person," Shelp said.
As of Dec. 1, about 656 of the 1,156 cases considered closed went through mediation, Torrance said. In the other cases, the borrower backed out before mediation.
Of those who went through mediation, 162 families, or 24 percent, were able to come to an agreement with the lender that allowed them to stay in their homes.
Overall with mediation, Shelp said the center typically has a 70 percent to 80 percent success rate. They mediate all types of conflicts, including family-related troubles such as parenting agreements in divorce proceedings.
Page said they expect similar success with the foreclosure mediation sessions.
FOR MORE INFORMATION
-- To speak to a housing counselor for free, call 877-894-4663.
-- Low- to moderate-income homeowners may be eligible for legal aid by calling 800-606-4819.
-- For more information about the Dispute Resolution Center of Tri-Cities, call 783-3325.
-- To submit business news, go to bit.ly/bizformtch.
-- Kristi Pihl: 582-1512; firstname.lastname@example.org