In an effort to prevent homeowners from losing their homes to foreclosure, the City has established a new ordinance, requiring lenders to offer mediation for homeowners facing foreclosure.
The St. Louis Board of Aldermen passed Board Bill No. 160CS, which Mayor Francis Slay signed into law Wednesday, February 27, 2013. The law takes effect immediately.
Home foreclosures have cost homeowners, lenders and the City millions of dollars since the housing crisis began in 2007. St. Louisans need and deserve help. In the last calendar year, 1,116 City homeowners went through a foreclosure.
"Home foreclosures present dangers to the health, safety and welfare of the public, thereby creating a public nuisance. They hurt property values and interfere with the collection of real property taxes. It's a serious concern, which municipal government cannot ignore," Mayor Francis Slay said. "The City is heartened by the willingness of the major lenders in town to participate in home foreclosure mediation."
This new ordinance addresses the communication breakdown between homeowners and lenders by asking the lender to meet with the homeowner to review loan difficulties, discuss possible modifications and explore federal housing resources prior to completing an owner-occupied, residential foreclosure.
The City's ordinance mirrors that in St. Louis County, making the mediation process consistent across the region and allowing for easier compliance by lenders.
Mediation is at no cost to the City or to City taxpayers. Lenders issuing the foreclosure will have to send a "notice of mediation" to the homeowner and mediator, plus pay a $100 filing fee. The mediator, United States Arbitration & Mediation Midwest Inc., will then attempt to reach the homeowner three times over 15 days. If the homeowner wants to participate in the mediation, the mediator schedules a meeting with the lender, at which time the lender pays an additional $350 to the mediator for the service. If the lender and homeowner come to an agreement during mediation, the homeowner stays in his/her home. If not, the lender is free to move to foreclosure.
The mediation process has proved quite promising. The Federal Reserve Bank of Boston studied the effects of the foreclosure mediation in New England, and of 10,000 homeowners in the program, 80% avoided foreclosure.
Washington University Law Professor Karen Tokarz, a nationally-recognized mediation expert, who helped draft the City ordinance, said: "With a mediator serving as a neutral third party, homeowners and lenders have a clear channel of communication to pursue mutually-beneficial alternatives to foreclosure, including modifications, which may be funded in part by federal programs."
The City has great partners in foreclosure counseling agencies like Beyond Housing, Catholic Charities and the Urban League.
All forms for lenders are available on the City's website as well as that of United States Arbitration & Mediation Midwest Inc.