When it comes to foreclosure mediation, how a program is designed has a large impact on eligible homeowners. That was the broad finding of the evaluation of six foreclosure mediation programs in Illinois I just completed. The evaluation assessed the first year of the programs funded by the Illinois Attorney General, using data from an online case management and program monitoring system that allowed all but one of the programs to collect the same data using uniform definitions for each data point. The six programs are located throughout the state:
- The 6th Judicial Circuit (Champaign County only), serving a university town and a largely rural county in Central Illinois
- The 16th Judicial Circuit (Kane County), serving a large suburban Chicago community
- The 17th Judicial Circuit (Winnebago and Boone counties), serving Rockford, Illinois’ third largest city, in north-central Illinois
- The 19th Judicial Circuit (Lake County), serving a large suburban Chicago community
- The 20th Judicial Circuit (St. Clair County only), serving a suburban St. Louis community
- The 21st Judicial Circuit (Kankakee County only), serving a semi-suburban community south of Chicago
Each of the programs is designed differently, from how homeowners enter the program to what services they receive when they do. Their differences, combined with the collection of the same data for each program, provided insight on the effect of program design on participation, home retention and homeowner experience. The most interesting findings from these different models include the following:
Higher participation leads to higher impact
In the 21st Circuit, 68% of homeowners participate in the program, and 14% of all homeowners facing foreclosure in the program county were able to save their homes. The other programs have participation rates of 7% to 25% and between 2% and 6% of all eligible homeowners keep their homes. The 21st Circuit’s high rate of home retention for all eligible homeowners facing foreclosure relative to the other programs is due to its very high participation rate and not to proportionately better outcomes for homeowners who participate in the program. If only participating homeowners are considered, the 21st Circuit has the lowest percentage who keep their homes.
High barriers discourage participation
Programs whose required steps for participation are difficult for homeowners have the lowest participation rates. Those with the easiest steps have the highest participation rates.
One-on-one orientation and assistance with entry encourage participation
Programs that orient the homeowners to the program at their first point of contact have higher rates of homeowners who complete the entry process. In the 16th Circuit, almost 90% of homeowners who contact the program coordinator for an initial conference enter the program. In the 17th Circuit, homeowners receive assistance completing their application for the program, leading to a higher rate of participation than in the 20th Circuit, where many homeowners do not have contact with the program until after they complete the steps to enter.
Homeowners who receive services other than mediation are more likely to retain their homes
In the 20th Circuit, those homeowners who received assistance from legal services were more likely to retain their homes than those who did not. While not statistically significant, this was true as well for homeowners who received housing counseling in that program. In addition, in the 17th and 19th Circuits, where all homeowners receive assistance from housing counseling, the level of understanding they gained and their satisfaction with the service were extremely high.
Homeowners benefit from a second opportunity to participate
In the 20th Circuit, more than half of participating homeowners are referred to mediation by the judge at the default judgment hearing. They also are at least as likely to obtain a loan modification as those who enter the program after receiving their notification of mediation. This means that homeowners who could get a loan modification are selecting themselves out of the mediation programs and should be given another opportunity to participate.