Att. Gen. Madigan Announces $3 Million for Foreclosure Mediation Programs, But Will They be Effective?

Attorney General Lisa Madigan announced Wednesday that $3 million will be utilized in establishing new mortgage foreclosure mediation programs.  These programs will be targeted to Illinois counties which lack such foreclosure agendas.  The sum of these funds stems from the $25 billion national settlement in February with the nation’s five largest bank mortgage servicers – Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Bank, formerly GMAC.  The suit, in which Madigan joined the 49 other state attorney generals, challenged particularly the “robo-signing” of foreclosure documents.

The program funding is available for multi-year grants to 501(c)(3) tax-exempt organizations.  But, these organizations must be able show the capability to manage mortgage foreclosure mediation programs.  In other words, eligible firms are required to have multiple facets to their program plan, including access to housing counseling and pro bono legal representation for eligible borrowers.  Moreover, they must include a sustainability plan that includes a long-term funding strategy—done so through either a dedicated filing-fee add-on or some other source.  Projects must also include the training of judges, key court personnel and volunteers on mortgage foreclosure mediation.  Clearly, such organizations must display a competent and committed strategy in order to undertake these mediation programs. 

“Effective mediation programs are proven to give homeowners a fighting chance to save their homes,” Madigan said. “Borrowers who’ve gone through foreclosure mediation have significantly better chances at receiving a loan modification and reaching a positive outcome.”

Are foreclosure mediation programs that effective?

To begin, our Oak Park & River Forest foreclosure lawyers understand that a state or county’s experience with these mediation programs can differ vastly.  Furthermore, not one mediation program is like the next.  Therefore, generalizing their worth (or lack thereof) is quite difficult.  Yet, we will try to examine the broad pros and cons that these projects contribute.

Pros

Mediation, in itself, can be a unifying force but also can hold a subjective eye to issues.   For one, foreclosure mediation allows for all sides to be openly discussing similar issues.  This means that communication occurs for a single case during a focused of period of time, breaching disconnects that borrowers may sometimes feel.  Moreover, mediation can be a forum to confidentially converse on particular situation; this allows for creative solutions to be produced, principally for cases that may seem outside the box.  Finally, mediation is not a court process.  That offers advantages in itself.  It permits both parties to freely discuss options and empowers individuals to make decisions on their own behalf.

Cons

Although mediation allows for effective and open dialogue, it lacks many abilities.  Mediation can serve as a setting for document exchange and review; yet, mediation programs, and the mediators in them, cannot resolve problems beyond the holistic process.  Moreover, mediation cannot, and should not, fix any corporations’ process.  Many of mediation programs ask for mediators to report on party behavior, or more specifically, servicer behavior.  This can crumble the confidentiality previously established.  With that being said, a program may decide that having an avenue whereby one can report bad party behavior in foreclosure mediation is more important than maintaining mediator ethics.  Therefore, the system contains certain flaws. 

It is important to do your own research on foreclosure mediation programs, as they will in the near future be affecting the state of Illinois.  Foreclosure can be an ugly process.  This state and this country are adopting new ways—whether healthy or not—in order to combat this housing plague.  If you are at all experiencing any foreclosure woes, do not hesitate to call or contact our Oak Park attorneys.  Our experience should be on your side .  

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