Since the onset of the housing downturn in 2006, foreclosures have weighed heavily on the recovery of national, state, and local housing markets. In response to the challenges posed by foreclosures, states and municipalities across the country have implemented a number of foreclosure-prevention strategies. The strategies have ranged from providing homeowners with legal assistance to developing million-dollar mortgage-refinancing programs run by state housing-finance agencies. Unfortunately, most of the foreclosure-prevention efforts have had limited success.
The exception appears to be foreclosure mediation. The reason is that foreclosure mediation solves a basic challenge facing any foreclosure-prevention effort: communication between homeowners and lenders. With a mediator serving as a neutral third party, homeowners and lenders have a clear channel of communication to pursue mutually beneficial alternatives to foreclosure.