Update on Home Foreclosure Mediation

Here is another in a series of articles updating the development of foreclosure mediation throughout the United States by Mediate.com News Editor, Keith Seat.

• Statistics about foreclosure mediation programs across the U.S. have been compiled by the Resolution Systems Institute in a 19-page report, Foreclosure Dispute Resolution by the Numbers.  The data show a wide variation in programs across the country.  For example, the percentage of foreclosures mediated ranges from over 60% in Philadelphia to single digits, while the percentage of foreclosure mediations reaching agreement ranges from over 80% in Connecticut to barely 20% in Maine.  Foreclosure Dispute Resolution by the Numbers (September 2012); www.AboutRSI.org
• The foreclosure mediation program in Springfield, Massachusetts was upheld by a federal court against a constitutional challenge by banks claiming that the state was the exclusive regulator of the foreclosure process, so a city could not create a foreclosure mediation program without state approval.  The court determined that the program did not significantly alter the foreclosure process or the relationship between lender and borrower, but merely sought to soften the crisis.  If successful, the challenge would have threatened many other mediation programs around the country.  Just Court ADR (August 23, 2012)
• In Missouri, a commercial bank filed a class-action lawsuit against a new ordinance in St. Louis County that requires banks to mediate prior to foreclosing on homes.  While the sponsor of the ordinance is confident it will be upheld, she also has introduced legislation to tweak the new law.  A public protest in favor of foreclosure mediation and against the bank that brought suit was held by members of Missourians Organizing for Reform and Empowerment. St. Louis Local (October 22, 2012)
• Oral arguments over the constitutionality of the foreclosure mediation program in Nevada were heard by the Nevada Supreme Court, which is also responsible for the mediation program – a potential conflict of interest that was raised by one justice.  Reno Gazette-Journal (October 7, 2012) (Subscription Required)
• Maryland has tweaked its home foreclosure law, with new regulations taking effect on October 1, which among other things will allow borrowers to request mediation even before lenders file to foreclose on a loan, resulting in earlier mediation.  In addition, a mediation checklist has been developed to ensure that short sales and other options are always considered by lenders during mediation.  Herald-Mail.com (September 2, 2012)
• A federal judge in Rhode Island is seeking recommendations on improving the foreclosure mediation process that many say is not working well and needs time limits.  The judge had appointed a former CEO of Rhode Island Bank to be special master and mediate hundreds of foreclosure disputes; the special master has held 130 settlement conferences and expects more.  Settlements have not been reached in most cases, but many requests for loan modifications are still pending.  Boston.com (October 9, 2012)
• The foreclosure mediation program in Oregon that took effect in July is severely underutilized, as most large banks have refused to participate for various reasons and nonjudicial foreclosure filings have dried up.  Advocates for lenders as well as homeowners are seeking a legislative solution to allow judges to send judicial foreclosures to mediation.  Oregon Live.com (September 14, 2012)
• Florida bankruptcy court’s foreclosure mediation program that began in Jacksonville in January is off to a slow start, but is working to allow some homeowners to stay in their homes.  To participate, homeowners must file for Chapter 13 personal bankruptcy and then seek to participate in the mediation program through their bankruptcy attorney.  Jacksonville Business Journal (October 25, 2012); Jacksonville Business Journal (October 26, 2012)

                       

Keith Seat

Keith L. Seat is a full-time mediator and arbitrator who can effectively assist parties in resolving a wide range of telecommunications, antitrust and other commercial disputes. With over twenty years of legal experience as a mediator, arbitrator, litigator, advocate before executive branch agencies, and key staffer in the legislative and… MORE >