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Notable Updates from the World of Foreclosure Mediation

Just Court ADR, August 15th, 2013

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.

The new rule also works for efficiency at the end of the mediation process. In the event that parties cannot reach a satisfactory outcome through mediation after two sessions, parties may file a motion to return to the trial court. This new process allows in-limbo cases to move forward and acknowledges that more mediation sessions may not always be an answer.

Cook County’s changes demonstrate the importance of evaluating existing programs and refining system process, showing that enacting foreclosure mediation specific rules can be a valuable tool in reaching this end goal.

Changes have also been made to the Oregon Foreclosure Avoidance Mediation Program, which began in July 2012 and required homeowners and lenders to meet for mediation before a lender could foreclosure on a mortgage. The mediation program applied to non-judicial foreclosures and not to foreclosures filed in court, greatly reducing participation in the program. The revised program, now called the Oregon Foreclosure Avoidance Program, took effect August 4, 2013 and requires that a lender request a resolution conference with a facilitator before initiating a judicial or non-judicial foreclosure proceeding. The hope is that by extending the use of mediation to apply to judicial foreclosures, more homeowners will be reached by the program.

Rhode Island has enacted HB 5335, which establishes a foreclosure mediation program effective September 1, 2013 through July 1, 2018. Under the new program, homeowners must be given the opportunity to participate in mediation before the foreclosure process can proceed. If no agreement can be reached between the parties, the mediator must certify that the lender has participated in mediation in good faith in order for foreclosure to move forward.

As established programs are refined and new programs are put in place, we will continue to follow the ways in which mediation programs are being used to address mortgage foreclosures across the country. Join the discussion by sharing program changes you’ve seen and check back on the blog for continued updates from the world of foreclosure mediation.

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