With the proliferation of foreclosure mediation programs, legislation, and reports, states and other entities attempting to create such programs need clear, expert guidance about lessons learned during foreclosure mediation’s four-year history. Especially with additional funding from the 49 state attorney general foreclosure settlement, states have the powerful opportunity to create high quality mediation programs. This report, which will be featured in three parts on this blog, highlights wisdom collected from existing programs, failed attempts to create programs, and mediation’s long history of success in resolving court-based and other types of disputes. The first section is on how to begin a foreclosure mediation program to ensure its success.
PROGRAM BEGINNINGS
Set Goals and Define Success
The initial step of gathering everyone in a room to talk about goals is a difficult one, but is essential for the subsequent foreclosure mediation program to succeed. Though it is tempting for one side of the foreclosure crisis to insist on a solution, all stakeholders need to feel engaged in the process. Many attempts to create and sustain programs have been thwarted because a servicer (the entity [often a bank] that services the loan for the entity/individual that owns it) was not on board or because borrower advocates were never asked to help develop the process meant to achieve resolution.
At a minimum, these stakeholders in a court-connected program would include attorneys for the banks, programs involved in helping homeowners deal with foreclosures, judges, mediators, and court administrators. Other stakeholders would be government agencies, such as consumer protection offices, housing offices, and attorneys general; attorney groups, such as legal aid and bar associations; or not-for-profits, such as housing advocacy and community mediation organizations. This allows all the stakeholders to have their interests and skills brought to the table to buy into and support the program, which increases the probability of success. Once the program is in place, the stakeholders can continue to advise the program, revisit policy, and so forth.
Once the stakeholders are together, they must determine their goal for the mediation program before talking about details of the program. When the goal is clearly defined, each program design decision can be made with the goal in mind. In the past few years, court systems have developed foreclosure mediation programs with a variety of stated goals: ensuring communication, improving efficiency and timeliness, assisting borrowers to stay in their homes, and stabilizing communities. Click here for an RSI report on the goals and purposes of foreclosure mediation programs in 26 states.
A note about program success: many successful mediation programs have defined success more broadly than just keeping borrowers in their homes. For instance, Connecticut’s statewide mediation program has a settlement rate of 82%. About 4 in 5 of those settlements involve a borrower retaining their home, but the program still sees the other options—short sales, move-out provisions, etc.—as successful settlements because borrowers have been able to discuss all their options and be part of deciding to leave the property.
Establish a Clear Process that Achieves Goals
A process that helps achieve established goals is one that effectively analyzes and uses the resources available (human and financial) and clearly communicates expectations to all participants. For instance, a court rule establishing the program may not get into much detail about where the required documents should be delivered, in what format they should be delivered, and by when they should be delivered. But, if the program then does not fill in those details and communicate the details to each person involved in the process, the program has created an information gap that will result in case flow problems. To identify such gaps, stakeholders have found it helpful to create flow charts, timelines, and contact sheets so everyone in the program has the same point of reference. Stakeholders should also consider the audience that will be receiving such communications. For instance, is communication about the process available in the languages of the participants? Are forms in legalese, or can they easily be understood by all borrowers? Is someone following the borrowers and servicers through the process, so if a deadline is missed or a document incomplete the parties will be contacted? Asking these questions when stakeholders are creating the process will lead to fewer complications once the program begins. Ohio offers a good example of a process that is clearly articulated.
Set Up Monitoring and Evaluation Systems to Give Regular Feedback
It is tempting to create a mediation program, then decide later to evaluate it. But ongoing monitoring and evaluation points out challenges earlier, leading to timely, rather than reactive, programmatic changes. It also helps stakeholders keep the goals of the program in mind, and determine whether the goals themselves need to change.
Two main questions need to be answered before putting the system into place: what will be monitored and how will that monitoring be done? Whatever information will be tracked, programs should aim to track input from all involved in the process, including housing counselors, servicer and borrower attorneys, borrowers, mediators, program managers, and the courts. Of course, when considering how monitoring will be done, the program should consider the personnel or systems it has in place to enter data. At minimum, the program should select a tracking system that gives it the ability to get a bird’s eye view (e.g., how many cases are closed each month) and zoom in on particular portions of the process (e.g., how many borrowers are receiving housing counseling before mediation, and what impact that has on rate of settlement). Tracking this information throughout the process will ensure a comprehensive evaluation, like a recent study of the New England states’ foreclosure mediation programs, can be done at any stage of the mediation program’s existence.
Tags: attorney general, attorney general (AG) funding, foreclosure, foreclosure settlement, funding, funds, loss mitigation, mediation, states
Excellent work, Heather. I can hardly wait to see what is coming in Parts 2 and 3. We continue to struggle to find a program in California, though there are little signs now and then that maybe there is hope. Best, Jim