PI Original Adam Doster Tuesday June 29th, 2010, 2:15pm

The Next Phase Of Foreclosure Mediation

In Cook County, housing advocates are stepping up outreach efforts to bolster its new foreclosure mediation program.

Housing advocates were thrilled last fall when the Cook County Board of Commissioners, at the behest of Action Now and other community groups, approved a $3.5 million budget amendment to fund foreclosure mediation services in Illinois' largest county. The money gives homeowners the opportunity to work face-to-face with housing counselors and their lenders to explore alternatives to foreclosure -- loan modifications, refinancing, payment plans, and other solutions. This free program, if successful, will help ease the glut of foreclosure cases straining the Cook County Circuit Court, which faces 60,000 pending foreclosure cases and expects another 50,000 filings this year.  (The Google Maps image above shows the foreclosures on Chicago's West Side earlier this year.)

Encouraging more mediations should be a no-brainer, as they usually benefit both sides (as compared to the foreclosure process).  However, these meetings rarely occur organically, partly because the initial paperwork that must be filled out by the homeowner is quite daunting.  For Cook County's program to work, housing advocates have to help residents get the ball rolling.

That's where a coalition known as the Foreclosure Convening steps in. On Thursday, this group of community organizations is launching a major outreach effort. With funding from the Chicago Community Trust, 10 groups will fan out across the region to discuss the possibility of mediation with struggling homeowners. Braden Listmann, the field director for Action Now, says his group is covering the South Suburbs and Chicago's Englewood, West Englewood, and Woodlawn neighborhoods. Eleven organizers will go door-to-door at homes facing foreclosure. Delicately, the organizers will explain who they are and alert the borrower about the program's benefits. They even offer to call Cook County's toll-free help-line from the doorstep to help initiate the process.

Braden says the Community Trust grant will cover outreach efforts through December. During previous canvassing drives, he has found that folks who own their property are "almost all interested in a way to save their homes."

Pro-bono attorneys are also critical to this process. Last weekend, the Chicago Bar Association held its first training to get lawyers up to speed on guiding homeowners through mediation. Chicago Volunteer Legal Services and the Chicago Legal Clinic will also be chipping in, hosting monthly trainings to keep the supply of attorneys steady. And the Foreclosure Convening field team offers to set up appointments with legal aid attorneys during their home visits.

Cook County isn't the only municipality experimenting with foreclosure mediation. According to a new report from the Center for American Progress (CAP), jurisdictions in 21 states are now offering similar programs, up from 11 last June. CAP also evaluated what makes particular initiatives most effective.  They found that participation increases dramatically if the first mediation session is scheduled automatically by the government once the mortgage servicer initiates the foreclosure process. The think tank's research further shows that 75 percent of eligible homeowners take part if the meeting is scheduled for them. For optional (or "opt-in" programs), participation drops to about 21 percent. While Cook County's program will be optional, there is precedent -- both in Connecticut and in Philadelphia -- for shifting to a mandatory system if judges and housing officials want to enhance their efforts going forward.

CAP also calls on state governments to formalize local mediation efforts statewide. This spring, Action Now and Business and Professional People for the Public Interest partnered to pass legislation in Springfield that places a $1,000 fee on any foreclosure sale in Illinois and funnels those proceeds into mediation programs.  Advocates argued that the fee is marginal to the banks holding the loans but could raise $40 million to keep delinquent borrowers in their homes -- and protect against the social and economic problems associated with foreclosure. Still, a cohesive statewide plan that connects housing counselors with the court system might be necessary so long as foreclosure filings are still abnormally high.


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