| NEWS | 
| | CLASI Works to Save Homes From Foreclosure Continued Historically, approximately 2,000 properties go through the foreclosure process in Delaware each year. With the crash of the housing market and the sub-prime lending crisis, Delaware courts have seen a tremendous increase in foreclosure filings. In 2008 over 4,000 properties went to foreclosure. Foreclosure filings rose another 24% in fiscal year 2009 (the year ending June 30, 2009), and another 39% in fiscal year 2010. The courts are overwhelmed by the increase and the impact on the community has been severe. Homes subjected to sheriff’s sale drive down property values in the surrounding neighborhood. Vacant, foreclosed homes fall into disrepair and become focal points for vandalism and other crime.
Delaware’s mediation process is patterned upon the model created in Philadelphia by Judge Annette M. Rizzo of the Philadelphia Common Pleas Court. Struggling with the increases in mortgage foreclosures, Judge Rizzo entered an order requiring mediation prior to foreclosure on residential mortgages. Mediation brings lenders, borrowers and housing counselors together to discuss alternatives to foreclosure. The process has been so successful that the program gained national attention and has been adopted by jurisdictions around the country.
The Delaware program requires a foreclosing attorney to send a notice of the mediation process to a borrower when the borrower is served with the Notice to Lienholders of the pending foreclosure. The borrower has 15 days to meet with a HUD-approved housing counseling agency to fill out a Universal Intake Form and submit a proposal to the mediation program and the lender’s attorney. The proposal to the mediation program is sent to Delaware Volunteer Legal Services (DVLS).
Once DVLS receives the proposal and intake form, a date is set for mediation. Mediation conferences take place once a month in each of the county courthouses. The parties appear at the courthouse on the scheduled mediation day for an informal meeting to discuss how to avoid foreclosure. If the parties cannot work out an agreement, they meet with a pro bono attorney mediator who tries to facilitate an agreement. If an agreement is reached, it is filed with the Court. If no agreement is reached, the lender may proceed with foreclosure.
The program is based on face-to-face negotiations between the lender, the borrower and the housing counselor. Both lenders and borrowers had complained that they could not establish communications with the other prior to and during the foreclosure process. Borrowers often are afraid to open mail from the lender. Lenders can be difficult to reach by telephone. The mediation process requires the lender to be present with authority to make a deal. Bringing the parties together to talk humanizes the situation and typically some type of agreement can be reached.
CLASI acts as facilitator for mediation conferences and reports program statistics to the Court. The steering committee meets on a regular basis to oversee the process. CLASI extends its thanks to JP Morgan/Chase, Discover Bank and ING Direct for their support of this project.
| | | | | | |  |
|