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Foreclosure Mediation Programs Reflect and Refine

Just Court ADR, April 22nd, 2014

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. Maine’s Attorney General Janet T. Mills led a six-month study of the state’s foreclosure response to evaluate progress and suggest improvements. The study concluded that efforts to respond to the foreclosure crisis were having a positive effect, but recognized that many communities throughout Maine are still suffering and continue to need resources. Attorney General Mills also looked specifically at Maine’s Foreclosure Diversion Program, which provides foreclosure mediation services, and concluded that the program has been effective and should be strengthened. The result of these investigations were sent to the Judiciary Committee and resulted in bill L.D. 1389, which was signed into law earlier this April.  Maine’s foreclosure mediation program began in 2009, and the new law will strengthen the program by incorporating the National Mortgage Settlement standards and focusing on the importance of funding for housing counseling services, which are often so integral to a homeowner’s success in mediation. Improving training and tightening standards for foreclosure mediators, who serve the program as independent contractors to the Judicial Branch, will also be required.

In conjunction with Maine’s Foreclosure Diversion Program, the state also runs a “First Call” Pilot Project, in which certain areas of the state use a modified timeline for mediation. With the pilot program, the timeline is expedited, with homeowners attending an informational session and initial mediation all on one day. At the informational session, homeowners learn about the foreclosure process and the mediation program from a judge and housing counselors, before breaking off to meet with their lender, lender’s attorneys and a mediator. By contrast, the rest of the Foreclosure Diversion Program requires a six week time period between the informational session and the first mediation.

Maine’s efforts to try new models, as well as to study what’s working and what should be modified have me thinking about the future. With support from the Illinois Attorney General, RSI has been working on the design, implementation and management of three different foreclosure mediation programs in northern Illinois. Unlike in Maine, these programs are just getting underway. Lake County’s program has been accepting cases since December 2, 2013, Kane County launched January 2, 2014 and Winnebago County is scheduled to start offering services for foreclosure cases filed on or after June 1, 2014. Nevertheless, we are starting to gather exciting data about the impact the programs are having and we have been reflecting on outreach efforts and program procedures. The programs vary based on local needs and resources and have their own program rules. RSI will be closely monitoring and evaluating each program’s progress and comparing notes. As our programs grow and develop, we’ll be reflecting and fine-tuning, and sharing with you along the way.

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