New Report Highlights Successes, Challenges in Foreclosure Mediation

As our nation’s foreclosure crisis has deepened one critical response has been the expansion of mediation programs across the country. As the Department of Justice’s Access to Justice Initiative explained in a report released this week, “Foreclosure mediation is an important intervention that, if well-conceived and carefully implemented, can have overwhelmingly positive impacts on homeowners, lenders and investors, and communities.” The report urges states and localities to evaluate and replicate successful mediation programs, and provides a strong framework for conducting such research.

Foreclosure Mediation: Emerging Research and Evaluation Practices highlights workshop participants’ calls for the federal government to promote foreclosure mediation. Recommendations include establishing federal guidelines for foreclosure mediation programs; helping to fund state and local mediation programs; and requiring federally-backed loans to go through mediation as a condition of foreclosure. The report also emphasizes the need to evaluate what works in mediation programs, such as to mandate participation from homeowners. All of these strong recommendations would help to encourage greater responsibility and accountability among lenders and loan servicers who have too often raced to push homes into foreclosure rather than seeking creative solutions that would benefit homeowners and lenders alike. 

The Brennan Center has studied the need for legal representation in foreclosure proceedings (including a report co-authored by Melanca Clark, who also co-authored this week’s DOJ release) and continues to advocate for legal representation for families in foreclosure. Recent data shows that homeowners often come to mediation without the benefits of legal assistance or other counseling. For example, in Franklin County, Ohio, 87 percent of homeowner cases scheduled for mediation did not have legal representation in 2009 and 2010. Without legal assistance, these homeowners are at a significant disadvantage to effectively navigate a system where loan servicers seem more eager to set up roadblocks than facilitate solutions.

Fortunately, many policymakers recognize the need for a greater investment in foreclosure prevention services such as legal assistance and counseling. Just this week, New York Attorney General Eric Schneiderman announced that he would direct $1 million in unused settlement funds toward foreclosure prevention legal services. We applaud this effort and urge officials in New York and across the nation to follow this example by providing adequate support for struggling homeowners. As we have stated, more needs to be done to invest in foreclosure prevention.

Encouraging mediation and investing in counseling and legal assistance pays enormous dividends by allaying the costs of foreclosures for families, communities and our nation’s economy as a whole. The Brennan Center will continue to press for access to justice in these cases, as a matter of fairness and due process, and as a necessary investment that will help all of us out of our current fiscal crisis.