Foreclosure Mediation Programs Are Evolving in a Number of States

In recent months, changes to homeowner foreclosure mediation programs were a hot topic in a number of states. In Illinois, the Supreme Court enacted Rule 99.1 in an effort to offer some level of flexibility in foreclosure mediation programs across the state. The rule went into effect on March 1st and requires judicial districts that choose to offer such programs to demonstrate feasibility, sustainability, compliance with HUD-certified counseling requirements, and homeowner access to pro bono attorney representation.

Next door, legislators in Missouri are currently considering whether to put an end to all homeowner foreclosure mediation programs. The bill was reportedly proposed in response to a 2012 St. Louis County law that allowed homeowners facing foreclosure the option to choose mediation. The law also required banks to participate and pay for the mediation. Under the St. Louis County law, banks that refused to participate in foreclosure mediation as well as those that participated in bad faith could be fined as much as $1,000. The Missouri Court of Appeals Eastern District later prohibited enforcement of the law in response to a judicial challenge by the Missouri Bankers Association.

Finally, in both Connecticut and Oregon, lawmakers are purportedly considering changes to statewide foreclosure mediation programs. Connecticut Governor Dannel P. Malloy recently announced a proposal that would require banks to maintain consistent contact with homeowners involved in the foreclosure mediation process. In Oregon, lawmakers are reportedly considering significant changes designed to increase the use of non-judicial homeowner foreclosure mediation programs.

Thanks to Court ADR Connection for bringing this topic to our attention. It will be interesting to see how homeowner foreclosure mediation programs continue to evolve in the future.