Boston Mayor Thomas Menino and the Boston City Council are looking to mediation to help with Boston’s rapidly rising residential home foreclosure rate. The program, similar to other programs across the country, would require a homeowner to meet with a housing counselor prior to mediation. It also requires lenders to participate before finalizing a foreclosure. In the mediation, the homeowner and lender could seek “commercially reasonable alternatives to foreclosure.”
The City Council ordinance, Docket #1592, comes on the heels of a state house bill, introduced by Rep. Vincent A. Pedone, which would require all lenders to make a good faith effort to mediate prior to foreclosing on a home. The bill did not pass, in part, because the bill required mediators to be court employees rather than volunteer or contract with the court. Cost of the program was a major concern.
The Mayor’s program, however, would keep the program largely out of the courts. As many other cities experienced, Boston’s foreclosure crisis hit its highest point this year. The Mayor’s Foreclosure Task Force recommended mediation as an approach to increase communication between lender and homeowner. The goal is to get homeowners to “get through to a real person to have a conversation about their situation.” Face-to-face contact seems a primary reason mediation programs gain popularity over traditional phone contacts or court hearings.
However, an outcry from many Boston sectors means the mediation program is in trouble before it begins. Some businesspeople are upset that adding mediation to a foreclosure case will lengthen the already year-long foreclosure process. Massachusetts’ largest banking group is concerned that lenders would be required to shoulder the financial costs of the mediation, which they say could be up to $3000. Kevin Kiley, COO of the Massachusetts Bankers Association, wants to see evidence that mediation programs work better for foreclosure processes than programs currently in place.
He is not alone: foreclosure mediation advocates and opponents alike want hard stats on whether mediations actually help homeowners save their homes or help the long foreclosure process to speed up. However, the Massachusetts Affordable Housing Alliance believes that even if the process takes longer, it’s worth it if it means saving properties. The City Council seems to agree. Though it could have passed the ordinance on December 12, 2010, the Council heard community feedback and recommended that a new draft be passed. Recommendations include lowering the cost for homeowners to $75 from a few hundred dollars and allowing homeowners to bring a supporter of their choice to the mediation (no attorney for the homeowner is currently required and Massachusetts has not adopted the Uniform Mediation Act).
Boston’s is not the first executive branch mediation program. In Providence, Rhode Island, the City Council created a similar program by vote in 2009.