Hundreds of people in danger of losing their homes through foreclosure may stay put due to a mediation program that just became mandatory in St. Clair County.
The Foreclosure Mediation Program brings together homeowners and lenders to find a solution when people can no longer afford their homes, including restructuring homeowners’ debt.
Since opening in St. Clair County in 2014, the foreclosure program has served 360 people, 35 percent of whom kept their homes, and five percent of whom reached a “dignified exit,” or when homeowners leave their property before a foreclosure judgment goes through, which can make it harder to get credit in the future.
The program in St. Clair County is run by the Dispute Resolution Institute, in Carbondale.
“Our highly trained staff are happy to have the opportunity to assist the parties through this stressful process, hopefully resulting in feeling heard and reaching an agreement whenever possible,” Missy Greathouse, the executive director, said in a statement. The Dispute Resolution Institute is not the same as free legal assistance to homeowners; rather, it is a neutral third-party that tries to balance the concerns of both homeowners and lenders.
Still, the institute, which meets with people in court on the first day of a foreclosure hearing, can correct commonly misunderstood information for worried homeowners.
For example, many people think they have to leave their houses within the first days of a foreclosure hearing, Greathouse said, but that’s not the case. Most people don’t have to leave for nine months while they pursue options.
The institute can also assess homeowners’ finances and connect them with legal representation, although many homeowners go through the process without it.
“The goal is to keep people in their homes or let them exit their homes in a dignified manner,” said program director Austin Mathis.
People can also sell their home before the foreclosure is final.
To prevent a foreclosure judgment, homeowners can work with lenders to get a consent foreclosure or a deed-in-lieu, which are both ways of signing over one’s house that, in many circumstances, stops lenders from chasing unpaid mortgage bills, Mathis explained.
Mediation can also help homeowners stay put by restructuring how they pay back their home loans. The process would take missed payments, interest and attorney’s fees from the foreclosure process, and tack them on the end of the existing home loan, but it would be spaced out over a longer period of time.
Mediation can also be helpful to lenders, Greathouse explained, as it assists homeowners with filling out the proper paperwork. Calls to foreclosure attorneys were unreturned.
There are about 800 foreclosures a year in St. Clair County, Mathis said. Most are due to job loss and not to over-borrowing, and there are fewer foreclosures from over-borrowing than there were after the 2008 Great Recession. A few foreclosures are due to adjustable-rate mortgages, otherwise known as balloon mortgages.
“The foreclosure program has been great for the St. Clair County community,” said Andrew Gleeson, the chief judge of the 20th Circuit, which covers St. Clair County.
The mediation program started in January 2014 with $5 million of the $25 billion national foreclosure settlement paid by five major banks that engaged in alleged “ ‘robo-signing’ of foreclosure documents and other fraudulent practices while servicing loans of struggling homeowners,” according to Attorney General Lisa Madigan’s office.
The funds went to three mediation programs throughout the state to train mediators, make the process smoother and other things.
Starting in May 2018, the program will be funded through a foreclosure filing fee, which is paid for by lenders.
Three steps to qualify for mediation program:
- People must live in the home that’s going through foreclosure
- Be listed on the mortgage
- Can’t be in active bankruptcy
You can reach the Dispute Resolution Institute at (618)-549-1500 Monday through Friday from 8 a.m. to 4:30 p.m.