Foreclosure Mediation Update

I found some interesting updates on the subject of mediation and foreclosure gleaned from the mediate.com website. With our economy in steep decline, I think we will see more homes lost to foreclosure. Hopefully our legislature will provide some mechanism to provide relief to hard working Americans.

New Jersey launched its mortgage foreclosure mediation program with the enactment of legislation in January. The Mortgage Stabilization Program and Housing Assistance and Recovery Program will be administered by the New Jersey Housing and Mortgage Finance Agency to give homeowners, who are trying to save their primary residence and who are not in bankruptcy, access to counselors, attorneys and mediators. Philadelphia Business Journal (January 9, 2009); NBC40.net (January 9, 2009).

Philadelphia, Pennsylvania’s mortgage foreclosure mediation program has been visited recently by a group from Kentucky and previously by delegations from Maryland, New York and New Jersey. Philadelphia’s program is believed to be successful due to direct outreach to homeowners, rather than simply relying on mailings about the court program. ACORN and 14 other organizations are conducting repeated door-to-door outreach to owners whose homes are in foreclosure. The Legal Intelligencer (January 16, 2009) (Subscription Required).

Nevada is considering legislation to require lenders to enter mediation at the request of homeowners seeking terms to avoid foreclosure. Mediations would be overseen by a judge or magistrate and would halt foreclosure proceedings. Nevada is a nonjudicial foreclosure state, which does not require court involvement before a lender can sell a house, and has the worst foreclosure rate in the country. Some in the industry fear that requiring mediation would be a move towards judicial foreclosures. Reno Gazette Journal (February 10, 2009).

Courts in three Florida counties along the Treasure Coast are considering a proposal to require mediation in foreclosure cases to try to assist homeowners in keeping their houses. The efforts are in response to a doubling of foreclosure cases between 2007 and 2008, and an increase of ten to twenty-fold since 2005. The mediation requirement may be instituted by administrative order in at least one court and apply to new foreclosure cases involving owner-occupied houses. The program would be overseen by a nonprofit mediation group based in Miami. Preventing foreclosure is estimated to cost $3,300, while foreclosure is calculated as costing $150,000 per home. Vero Beach Press Journal (February 13, 2009) (Subscription Required).

The mayor of Milwaukee, Wisconsin is working with courts and lenders to create a foreclosure mediation program that would allow owners facing foreclosure to meet with lenders in a mediation to seek to renegotiate their loans. Milwaukee County foreclosures have tripled from 2006 to 2008. Milwaukee Journal Sentinel (January 16, 2009).

The mayor of Providence, Rhode Island has proposed ordinances to protect both owners and tenants in home foreclosures. The first would require lenders to mediate with homeowners prior to foreclosure, with the assistance of a state agency. The other ordinance would protect renters from having to vacate foreclosed property before their leases end. The proposals are said to be similar to what the Philadelphia County Court has mandated, but concerns have been raised about the enforceability of the mediation ordinance. Providence Journal Bulletin (February 3, 2009) (Subscription Required).