Just the other day, I learned the term “sunk-cost bias” and immediately thought of the mortgage foreclosure work that I do. The term was new to me, but the concept was not: sunk-cost bias describes why it’s so hard for us to walk away from something and cut our losses (and explains why I spent 3 hours waiting in line for the Indiana Jones ride at Disneyland). With sunk-cost bias, our minds go through a process of telling us that we should hold on because otherwise the time, money and energy already invested would be a waste, even when such a decision is irrational and just sinks us further in the hole. The concept can have very real implications for more serious life choices, like whether or not to remain in a home once in foreclosure. (more…)
Posts Tagged ‘foreclosure mediation’
Last Wednesday was a great evening for RSI! We held our first-ever “friendraising” event and presented our first-ever RSI Appreciation Award. Our generous friends at the Chicago office of the Skadden Arps law firm kindly hosted a beautiful reception for about 60 people. This was our first reception designed to introduce RSI to new friends in the Chicago corporate and legal world. Attendees included lawyers from some of Chicago’s largest corporations and law firms, judges from the counties where RSI conducts foreclosure mediation programs, and RSI’s own Board and staff members, with a sprinkling of local neutrals, funders and others. The two highlights of the program were remarks by the Illinois Attorney General and the presentation of the RSI Appreciation Award. (more…)
Foreclosure mediation programs can now be found all over the country. Models vary widely, both in their rules and procedures and in terms of the populations they serve. Most programs were started as a response to the mortgage foreclosure crisis and some programs have been around for a number of years now. While it’s often argued that the worst of the housing crisis is behind us and that foreclosure mediation programs are no longer necessary, new studies are revealing that the need is there, that programs can be effective, and that there are lessons to be learned in terms of how programs can maximize results.
Maine is one state evaluating its foreclosure response and concluding that foreclosure mediation is having a positive impact. (more…)
When Resolution Systems Institute received a grant from the Illinois Attorney General to develop foreclosure mediation programs across the state, it was our opportunity to practice what we preach. From RSI’s inception, we’ve been telling courts that they need to monitor and evaluate their mediation programs to ensure that they’re providing quality services to those who come to them to resolve disputes. We’ve also been urging them to incorporate the development of a monitoring and evaluation system into their program design process. Too often, courts have decided against doing this, or have settled for a system that collects minimal data, such as number of mediations and number of settlements. The main problem has been lack of staff and money to develop and maintain such a system, as well as, perhaps, a lack of understanding of what it could provide. (more…)
There have been some interesting new developments in the arena of foreclosure mediation recently. These developments and rule changes signal that jurisdictions continue to recognize the important role that mediation can play in the housing crisis recovery and that programs are being refined to ensure greater efficacy and efficiency.
First, in the Chicago area, the Chancery Court of Cook County has amended its rules that affect mortgage foreclosure mediation. Effective August 1, 2013, these new procedures are designed to streamline the foreclosure mediation process and make it more effective. For example, parties are now required to exchange and review all documents prior to referral to mediation. Homeowners must submit financial documents and the lender must review them in a timely manner in order for the process to move forward. The goal is that when mediation occurs, both parties have the information they need to make decisions and work toward an outcome. (more…)