States Increase Use of Mediation of Home Foreclosures

A number of states have recently moved forward to utilize mediation as a part of mortgage foreclosures and re-negotiations.

Connecticut has begun a foreclosure mediation program through legislation enacted on June 12 which is said to be the first of its kind in the U.S. The mediation program allows homeowners facing mortgage foreclosure on primary residences to request mediation. The program is free to homeowners. With a state appropriation of $2.5 million, twelve staff mediators have been appointed for the state, along with seven case flow coordinators. The goal is to keep homeowners in their homes, often through refinancing or restructuring debt. While the program manager estimates that 4,000 homeowners are eligible for the new program, only about 40% have applied thus far. Connecticut Post (October 4, 2008)

New Jersey Governor Corzine set forth a sweeping financial rescue plan before a rare joint session of the New Jersey legislature. The rescue plan requires mediation in contested foreclosures, which is to be implemented statewide within 60 days. WCBS-TV New York (October 16, 2008)

The Ohio Supreme Court recommends that Ohio counties implement mediation programs, so Sandusky County has begun a foreclosure mediation program using the Court’s model. To participate, homeowners in foreclosure must request mediation, agree to participate in a credit counseling session and allow an appraiser to determine their home’s current value. Entering into mediation with a sense of what the homeowners can do financially and their property value, along with requiring banks to send a representative with decision-making authority, makes the mediation process more effective. Fremont News Messenger (October 1, 2008)

Ohio’s Stark County Common Pleas Court is encouraging homeowners in foreclosure to use its mediation program, which has been successful in keeping homeowners in their homes in about half of the mediations. The $50,000 cost of the mediation program is funded by foreclosure case filing fees. The program is run by the Community Mediation Center. Canton Repository (Ohio) (September 7, 2008)

Individual judges are ordering mediations in home foreclosure cases in Florida, as many homeowners have difficulty finding anyone with whom they can try to work things out at their lenders’ offices. Judges in Florida’s Eighteenth and Seventh Judicial Circuits are currently requiring mediations; the Fifth Circuit is considering implementing mediation requirements, while the Ninth Circuit is not. The various circuits are expected to share experiences about how best to handle increasing foreclosure filings. Orlando Sentinel (October 6, 2008)

A nonprofit organization, Earth Angels United, is administering a foreclosure mediation program in Florida’s Eighteenth Judicial Circuit, to help reduce the strain caused by a 200% increase in foreclosure cases. Orlando Business Journal (October 29, 2008)

                       

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 >