New Castle – Attorney General Beau Biden and legislative leaders today unveiled legislation that would extend a critical state program that provides assistance to homeowners facing foreclosure.

In response to the foreclosure crisis, which has seen a record 25,000 foreclosures statewide over the past five years, Biden’s office and legislators produced a package of bills in 2011 that were enacted with broad bi-partisan support.  Among those measures was legislation that strengthened Delaware’s existing voluntary foreclosure mediation program.  Modeled after successful programs in Philadelphia and Connecticut, Delaware’s new automatic mediation program requires lenders to have a meaningful face-to-face discussion with borrowers about a payment plan or other options before a foreclosure can proceed.

Since the automatic mediation program took effect last January, 58% of homeowners in foreclosure have participated in the mediation conferences that have taken place, and among those homeowners, 80% have either reached a non-foreclosure resolution or continue to be in discussions with their banks.  Under the 2011 bill, the automatic mediation program was set to expire at the end of 2013.  Today, Biden and lawmakers proposed to extend the program for an additional four years.

“The foreclosure crisis continues to impact Delaware families up and down the state,” Attorney General Biden said. “Losing a home to foreclosure can be devastating, and borrowers deserve the opportunity to meet face-to-face with their lender and explore all available alternatives. Our strengthened mediation program has proven to be effective in helping homeowners avoid foreclosure, and it should be extended for four more years.”

Rep. Helene M. Keeley, the bill’s prime sponsor who plans to introduce the bill in the House this week, said that the program’s success, coupled with the slow economic recovery, make it imperative to continue the program and provide a lifeline to those in need.

“We stood here two years ago pointing out how complicated the mortgage modification process is and calling this program a leveling of the playing field between banks and homeowners,” Rep. Keeley, D-Wilmington South, said. “Now we have data showing just how successful this program has been at helping homeowners reach an agreement with their bank, stay out of foreclosure and keep a roof over their heads. Although this housing crisis is slowly fading, there are many families who are facing or will be facing foreclosure and will need the guidance this program offers. Continuing the program will help keep families in their homes and paying their mortgage, which helps everyone involved.”

“This program is needed to benefit  Delawareans and all our communities as we heard during the Housing Authority’s testimony last week before the Joint Bond Bill Committee,” said Sen. Bethany Hall-Long, D-Middletown, who was the prime Senate sponsor of both the original bill and the current measure. “We know that saving a family’s home is not only good for that family but a benefit to the entire community as saving homes from foreclosure keeps property values up and helps prevent blight and decay.”

Senator Bryan Townsend (D-Newark-Bear) said, “Many hard-working Delaware families and communities are still seeking stability after a historic economic downturn.  Neither benefit when foreclosed homes become vacant.  As chair of the Senate Banking Committee, I have spoken with several banks that support the extension of the mediation program and the community-wide advantages that an extension will bring.  I thank them for their support, and I stand alongside Attorney General Biden, Senator Hall-Long, and Representative Keeley in supporting the extending of this program and providing real relief to the Delaware economy and Delaware families.”

State Rep. Mike Ramone (R-Newark), a co-prime sponsor in the House, stated, “We knew when the automatic mediation program was implemented last year that once the economy fully rebounded the program would no longer be needed.  However, we’re still in the recovery process.  I applaud the Attorney General and my legislative colleagues for realizing that the need still exists.  This bill will help more of those Delaware families who have been hit hard by this down economy to avoid foreclosure.  When that happens, everyone benefits.”

Rep. John A. Kowalko, who has helped to double the period a homeowner facing foreclosure can enter the state’s mediation program, said the program should be continued to help those still facing foreclosure during this economic downturn.

“This new legislation ensures that the Foreclosure Relief Programs will likely outlive the foreclosure crisis and be available for those less fortunate who risked losing their homes during the economic downturn,” said Rep. Kowalko, D-Newark. “Ultimately, the responsibility to help and safeguard the homeowners and families of Delaware lies with us as elected leaders. It is our duty to protect those people while at the same time offering practical solutions to enable a rapid economic recovery with minimal intrusion upon the banks and mortgage holders.”

Today’s press conference was held at the Rose Hill Community Center, which serves one of the state’s communities hardest hit by the foreclosure crisis.  Over the past five years, more than 750 Sheriffs Sales of foreclosed homes have occurred in the zip code (19720) where the Community Center is located, the second-highest number of foreclosures by zip code in the State over that time.

The event also featured remarks by Bernice Edwards, Executive Director of First State Community Action Agency, which provides free housing counseling services to homeowners from their offices at Rose Hill Community Center.  Edwards recognized Biden and the legislators for their support, saying “Thank you for partnering with us on the front lines.  With the resources you have provided, we have been able to prevent foreclosures for many homeowners.  With this legislation we’ll continue to be here to help those who face the loss of their home.”

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