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Update on Home Foreclosure Mediation
This is another in a series of updates on the development of foreclosure mediation in the U.S. by Mediate.com News Editor, Keith Seat.
- New legislation enacted in Massachusetts requires lenders to offer loan modifications when that would provide them more net value than foreclosure. The legislation will also create a task force to study mediation programs and their effectiveness, rather than making mediation mandatory for all loans as proposed by the Senate. Businessweek (August 27, 2012); Sentinel and Enterprise.com (July 27, 2012); Boston Herald.com (July 25, 2012); Boston Herald.com (July 24, 2012)
- A federal judge upheld an ordinance in Springfield, Massachusetts that had been challenged by six banks, concluding that requiring lenders to engage in mediation with homeowners facing foreclosure or pay a $300/day fine did not violate state law or constitutional protections. Boston.com (July 3, 2012)
- A new ordinance in St. Louis County, Missouri requires lenders to participate in mediation prior to foreclosure if the borrower requests it or pay a $1,000 fine. Mediation would be financed by fees on lenders. Lenders vigorously opposed the ordinance and may challenge its constitutionality. University City Patch (August 30, 2012); St. Louis Post-Dispatch (August 26, 2012)
- About 300 foreclosure mediators have been trained to handle the thousands of mediations that were expected to occur once Oregon’s new foreclosure mediation statute went into effect on July 11. But the onslaught has not yet occurred, as out-of-court foreclosures essentially stopped when the statute took effect. Even requests for mediation allowed under the new law by homeowners who feel at risk of foreclosure but have not yet missed payments have not received any response from private lenders. A lobbyist for an Oregon lenders’ association explained that lenders are simply trying to figure out how best to proceed, as there are numerous changes in addition to the new legislation, including an appellate court decision, new servicing standards from the nationwide mortgage settlement and new rules from federal agencies. Statesman Journal.com (July 11, 2012); Oregon Live (July 11, 2012); Oregon Live (August 29, 2012)
- The District of Columbia city council is considering further changes to D.C.’s foreclosure laws, including doubling the foreclosure mediation period to 180 days and strengthening the obligation of parties to mediate in good faith. Washington Examiner (July 1, 2012)
- Illinois now has foreclosure mediation programs in the counties of Cook, Will, Peoria, Madison/Bond and McLean. Although there are differences between them, all are provided without cost to borrowers and provide a sense of fair treatment for borrowers, who may better understand what is happening and what their options are. This is an aspect of mediation success that is often ignored by a focus limited to whether the borrower is able to stay in the house or is able to give up the house and avoid further liability. Cook County, which has the largest mediation program, is shifting to more in-court pre-mediation screening of which cases will actually benefit from the mediation program to reduce the wait for mediation which sometimes exceeds six months. Illinois State Bar Association (June 2012)
- Financial eligibility is no longer a requirement to participate in the Foreclosure Mediation Program in Madison County, Illinois, according to a state court, and any homeowner may enter mediation if their primary residence is in foreclosure. STLToday.com (August 29, 2012)
- The Legal Assistance Foundation is receiving $4.7 million to help homeowners in Chicago and Cook County, Illinois, and will collaborate with courts to improve the Cook County Foreclosure Mediation Program. The funds are from the $25 billion national foreclosure settlement in February. Chicago Sun-Times (August 28, 2012)
- Over $2 million is going to Resolution Washington to support the Washington Foreclosure Mediation Program and to train volunteer foreclosure mediators as part of the $44 million the state of Washington is receiving for foreclosure relief as part of the $25 billion national mortgage settlement with the nation’s five largest mortgage servicers. Seattle PI.com (August 27, 2012); The Seattle Medium (August 29, 2012)
- Pennsylvania is said to be using the bulk of its recovery from the nationwide mortgage settlement to restore funding to its foreclosure mediation program, the Homeowner’s Emergency Mortgage Assistance Program. Keystone Politics (August 9, 2012)
- Maryland had the highest rate by far of new foreclosure filings of all states in the second quarter of the year, caused in part by a backlog due to lenders delaying foreclosure filings last year while state officials worked on final regulatory language implementing the state’s new foreclosure mediation statute. A new law is to take effect in October, with a pre-foreclosure mediation program to permit homeowners who receive delinquency notices to begin the modification process. Loan Safe.org (August 10, 2012)
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 judicial branches, Mr. Seat brings a wealth of experience to his work as a mediator and arbitrator to help parties reach successful resolutions of complex disputes.
Mr. Seat began his legal career in a federal clerkship with U.S. District Judge William H. Becker, and then litigated antitrust and commercial disputes for many years at a major Washington law firm, Howrey, Simon, Arnold & White, where he first worked on telecom and technology issues. In 1993, Mr. Seat was named General Counsel of the Antitrust, Business Rights and Competition Subcommittee of the U.S. Senate Judiciary Committee, where he served for four years, playing a significant role in the enactment of the Telecommunications Act of 1996. Returning to the private sector in 1997, Mr. Seat rounded out his experience with a senior in-house counsel position at MCI, one of the nation’s largest telecommunications firms. At MCI, he gained a first-hand appreciation for the important perspective brought to issues and disputes by in-house decision-makers. Mr. Seat also deepened his knowledge of telecom issues and gained experience addressing competition-related issues in the corporate setting, as well as helping resolve disputes among large organizations.
Additional articles by Keith Seat