Mediation of Home Foreclosures Can Work; Politics; Legislation Would Not Cost St. Louis County Residents or Take Away Property Rights; OTHER VIEWS
Todd Swanstrom; Karen Tokarz, St Louis Post-Dispatch (MO)
The St. Louis County Council is considering legislation that would establish a mediation program to address the foreclosure crisis in St. Louis County, which has undergone 18,000 home foreclosures since 2007 and is on track for 4,000 more this year. At the council meeting to review the proposed ordinance, opponents testified that "mandatory" mediation would "deprive citizens of their property rights without due process of law" and charged that it would do "extraordinary harm to the St. Louis County economy and home values."
These are serious charges that, if true, would make it impossible for any responsible elected official to support foreclosure mediation. But, these criticisms of foreclosure mediation are not supported by research and appear to be based on misunderstandings of the process.
First, foreclosure mediation does not tell anyone what to do with their property. Under the law, homeowners facing foreclosure would have a new right - the right to request a meeting with their lender prior to foreclosure.
Foreclosure mediation mandates a process, but not any particular outcome. The mediator is a neutral facilitator, with no power to rule. The goal of the mediation process is to explore alternatives to foreclosure that are acceptable to both homeowners and lenders. Both are free to reject any agreement they regard as not in their best interests.
The taxpayers of St. Louis County will not bear any costs for the program. When filing a foreclosure notice, lenders will be required to pay a $150 fee to cover administrative costs. They will be required to pay another $350 if, and only if, the homeowner requests mediation. Given experience with other mediation programs around the country, only about 15 percent to 20 percent of homeowners facing foreclosure are likely to request mediation.
But, why should lenders pay these fees and not the homeowners or the taxpayers? The reason is simple: Lenders and those who service the loans have repeatedly failed to provide homeowners a fair and workable process. The problems are well-documented - homeowners cannot find anybody to talk to, paperwork is lost, and robo signers approve thousands of documents without checking their legal validity. The recent $26 billion settlement with five of the nation's biggest banks is clear evidence that lenders and servicers have been engaged in widespread foreclosure abuses.
Second, we do not know of any research supporting the claim that foreclosure mediation will damage the local economy, depress the real estate market and deprive future borrowers of access to credit in St. …