Oregon’s governor recently signed a law that will expand a mediation foreclosure program that state has been using for some time.  The program was officially launched last summer, but many mortgage lenders were circumventing the program.  When mortgage lenders made every effort to push foreclosures immediately into the court system without even attempting mediation, it was clear that the law was not working as effectively as it might have been intended to do. 

Initially, the law was written to only work with foreclosures submitted through county record filings, since the majority of foreclosures in the state’s history had been done this way.  The new expansion of the law will allow homeowners to put in a mediation request if it’s been suggested by a housing attorney or counselor.  The new law does not, however, provide mediation options for any mortgage lender with less than 175 foreclosures in the prior calendar year. 

Mediations are relatively new to the mortgage and housing industry, and this means that best practices are also being studied intensively.  Many people facing foreclosure prefer not to answer unexpected phone calls or open their mail, so outreach has been a challenge for the newly generated mediation programs in various states.  Some jurisdictions have invested in funds for door-to-door individuals to raise awareness and share information about the benefits of mediation.  Other programs require that borrowers meet with an attorney prior to entering the mediation process so that the homeowners are aware of their rights and how the mediation process will unfold.  Housing counselors are also regularly being incorporated into pre-mediation proceedings. 

The use of mediation in foreclosure situations can help homeowners to save their houses while also avoiding the court system and the trauma and time associated with it.  Continued evaluations of existing mediation programs will likely result in even better opportunities for homeowners.