A law that is already in effect in Florida and Nevada, which requires mandatory mediation between homeowners and their lenders before foreclosure proceedings take place, is being pushed to be put into effect in Utah as well.
Advocates for Utah homeowners facing declining home values are starting a petition, which they say will level the playing field between homeowners and lenders during mediation. It would give homeowners and lenders the opportunity to negotiate terms to help homeowners keep their homes. Being one of the hardest hit states by the housing crisis, Utah ranks within the top ten with highest number of foreclosures on mortgages.
Although many desperate home owners often attempt to negotiate loan modifications on their own, the attempt usually falls through, with lenders refusing to grant loan modifications.
Reasons cited for the denials of loan modifications are often lost paperwork sent to the bank, or that the home owner filled out a form incorrectly. Instead of helping the home owner apply for a loan modification correctly, the lender will usually foreclose on the property instead.
Mandatory mediation between home owners and lenders could increase the success rate of loan modification applications, increasing the number of people able to keep their homes.