FORECLOSURE MEDIATION UPDATE:
March 17, 2009
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).
A new home foreclosure mediation program takes effect March 13 in the Florida counties of Indian River, Martin, Okeechobee, St. Lucie under an administrative order which provides free mediation and counseling services to homeowners who live in their homes. Banks will pay a flat fee of $750 in the program administered by the Collins Center, which handled the mediations of insurance disputes resulting from hurricanes in 2004. The program responds to a doubling of foreclosure cases between 2007 and 2008, and an increase of ten to twenty-fold since 2005. In contrast with mediation, proceeding with foreclosure through the courts is estimated to cost $75,000 per home. WPEC (February 19, 2009); Administrative Order 2009-01; Vero Beach Press Journal (February 13, 2009) (Subscription Required)
Mediation is mandatory for all homeowners who go into foreclosure in Orange and Osceola Counties in Florida pursuant to an order by the Chief Judge. The mortgage lender must negotiate in good faith within 45 days and must pay for the cost of mediation. My Fox Orlando (February 26, 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).
Indiana is training lawyers and judges about loan modification programs and mediation opportunities, with 100 signed up for a March training. A later training will cover mediators. The Chief Justice of the Indiana Supreme Court has promised to have 700 judges, pro bono mortgage lawyers and mediators in place by summer. Chicago Tribune (February 27, 2009)
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) Las Vegas Sun (February 16, 2009)
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).