This is another in a series of updates on the development of foreclosure mediation in the United States by Keith Seat, Mediate.com News Editor.
Update on Home Foreclosure Mediation
Oregon enacted legislation in early June to expand its mortgage foreclosure mediation law to cover judicial foreclosures as well as non-judicial foreclosures. After foreclosure mediation was required last summer in non-judicial foreclosures, most lenders shifted to judicial foreclosures in part due to a judicial decision on another issue. The new legislation exempts lenders that initiated fewer than 175 foreclosures in the prior year. The mediation program under the new law will be available to homeowners in early August. The Oregonian (June 4, 2013); LoanSafe (June 7, 2013); BlueOregon (May 13, 2013); Senate Bill 558A
Vermont has expanded its foreclosure mediation law to cover all federal programs – Fannie Mae, Freddie Mac, FHA and the VA – rather than only the Home Affordable Modification Program (HAMP). The new legislation also authorizes the Vermont Bar Association to help parties find mediators and requires periodic classes for mediators. Court ADR Connection (June 2013)
Rhode Island foreclosure cases face additional uncertainty after the U.S. Court of Appeals for the First Circuit overturned a trial judge’s decision halting foreclosures while the parties attempted to find a resolution through mediation. The appellate court, with retired U.S. Supreme Court Justice David Souter writing the decision, concluded that banks should have been given a hearing on the likelihood of success before the court effectively granted an injunction and that the amount of time and money spent on mediation should have been capped. Boston Globe/AP (June 19, 2013); Providence Journal (June 21, 2013)
The city of Lynn, Massachusetts, adopted a new home foreclosure mediation ordinance in June, which requires lenders to work with homeowners to try to prevent foreclosure prior to filing a foreclosure deed. Banks are responsible for the costs of mediation and the intention is for the city not to bear any costs. The ordinance was passed by councilors overriding the veto of the mayor, who was concerned about the cost of the program. Legal challenges to the new law are expected. Daily Item (June 18, 2013); Daily Item (May 18, 2013)
The city of Lawrence, Massachusetts, recently began requiring lenders seeking to foreclose on residential property to first go to mediation before beginning foreclosure. Lawrence patterned its law on the one in Springfield that was upheld in court. The Massachusetts state legislature recently appointed a task force to study whether foreclosure mediation should be required of lenders statewide. Eagle-Tribune (May 7, 2013)
Legislation to prohibit local laws or ordinances from dealing with real estate loans, and thus eliminating mandatory foreclosure mediation in both St. Louis County and St. Louis, Missouri, passed the Missouri House and Senate and has been sent to the governor for his signature. St. Louis Post-Dispatch (May 7, 2013)
The House of Representatives in Connecticut unanimously passed legislation that would enhance the state’s existing foreclosure mediation program, requiring mediation to be in good faith and reducing delays and paperwork. Boston Globe (May 24, 2013)
The Supreme Court of Nevada concluded that under Nevada law the holders of both the deed of trust and the promissory note must participate in the state’s Foreclosure Mediation Program. In this case, Bank of America held the note but not the deed of trust, so the court determined that the absence of the deed of trust beneficiary at the mediation required the imposition of sanctions. Bergenfield v. Bank of America, 129 Nev. Adv. Op. 40 (Nev. June 6, 2013)
The Alabama attorney general is making awards to six recipients from the National Mortgage Settlement Funding Program, including $500,000 to the Alabama Statewide Foreclosure Prevention Mediation Program for training mediators throughout the state in foreclosure mediation and providing about 300-500 foreclosure mediations.
Foreclosures in the District of Columbia have fallen dramatically, from a 10-year high of 1,349 in fiscal year 2010, when legislation was passed requiring foreclosure mediation, to 566 in FY2011 and only 89 in FY2012, due to an improving economy, national foreclosure settlements requiring lenders to work with homeowners, and foreclosure mediation. Washington Informer (June 12, 2013)
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.