Courts Intervene to Help Homeowners
by James Brooks
The courts are becoming the last refuge for homeowners who are in foreclosure but still hope to remain in their homes under a loan modification. Actions taken by courts or by the state government in Pennsylvania, Florida, New Jersey and Connecticut are requiring mediation between mortgage servicers and delinquent borrowers before the property at issue is allowed to be sold.
The Court of Common Pleas for Philadelphia County launched the Residential Mortgage Foreclosure Diversion Program in April 2008. This pilot program required a judicially supervised “conciliation conference” between the owner-occupant of residential property and the lender or mortgage servicer before the property was eligible for a sheriff sale.
More recently, the Florida Supreme Court instituted a statewide managed mediation program designed to improve the level of communication between the plaintiff (lender) and the borrower. The order requires that all foreclosures of residential homestead properties be referred to mediation within 120 days of a foreclosure filing. Mediation is to be undertaken by qualified nonprofit organizations, and the costs are to be shouldered by the lender.
The statewide program in Florida built on voluntary efforts to help navigate the foreclosure process already working successfully in Sarasota County through collaboration between the county commissioners and the chief judge.
The Judiciary in both the states of Connecticut and New Jersey has a foreclosure mediation program. As in Philadelphia County, the Connecticut program makes use of a mediator employed by the judicial branch. The New Jersey program combines the resources of the Judiciary, Attorney General, Housing and Mortgage Finance Agency, Legal Services Division and Department of Banking and Insurance.
Lehigh and Northampton Counties in Pennsylvania also offer mortgage mediation hearings for homeowners facing foreclosure. The State of Maryland will consider a similar program during the upcoming meeting of the state legislature.
Details: For more information and to learn about NLC’s programs and initiatives on foreclosure, contact the author in the Center for Research and Innovation at brooks@nlc.org.
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