County may get mediators

Thursday, November 5, 2009

By Jane Beathard
Staff Writer

Legislation requiring Ohio’s common pleas courts to establish a mediation process for residential foreclosures was introduced into both houses of the General Assembly in recent weeks.

Mediation puts an impartial third-party negotiator at the table with both the lender and the homeowner. The goal is to encourage communication between the two parties so that each has an understanding of the other’s position.

State Rep. Matthew Dolan (R-Novelty) introduced H.B. 306 on Oct. 6. Sen. Shannon Jones (R-Springboro) introduced companion legislation, S.B. 197, on Oct. 28. The Housing & Urban Revitalization Committee heard sponsor testimony on the House version on Wednesday, Nov. 4. The Senate bill is awaiting committee referral, according to Kelly Carey, legislative aide to Sen. Jones.

Rep. Dolan said a large number of foreclosures in his district, which includes Geauga and part of Cuyahoga counties, spurred him to sponsor the bill. He hopes it will slow the pace of sheriff’s sales in Ohio and keep people in their homes.

“What works is when borrowers and lenders talk,” Dolan said.

He noted that many of Ohio’s problems are tied to out-of-state lenders.

“The issue isn’t with local banks,” Dolan said. “They don’t want to see their neighborhoods go downhill.”

Instead, mortgages have been sold two or three times over, ending up in the hands of big banking companies outside Ohio. In some cases, homeowners lost track of their mortgage holders in the process. Mediation would force a face-to-face meeting between the two, he said.

Dolan’s legislation has support from both Republicans and Democrats.

“And there’s industry-wide interest,” he said.

It would require all county common pleas courts to provide mediation for foreclosures on occupied residential property where the homeowner filed a formal answer in court to the action. Foreclosures due to unpaid property taxes are not covered by the proposed legislation.

Madison County’s common pleas court currently has no formal mediation process for residential foreclosures, as reported in The Press on Oct. 29.

Dolan’s bill would also establish guidelines for training mediators in compliance with the Ohio Uniform Mediation Law. Homeowners facing foreclosure could remain in their homes during the mediation process.

Mediator pay would come from a special fund administered by the county treasurer. Up to $500 in additional court fees paid by the lender when filing a foreclosure action would keep the fund supplied with money. It currently costs $900 to file a foreclosure in Madison County. The common pleas judge would determine the additional amount.

Dolan said he understands that some counties can bear increased filing fees better than others.

“That’s why we put the ‘up to’ in it (the bill),” he said.

Judge Robert D. Nichols welcomes any legislation that provides his court direction on foreclosure mediations.

“It gives us a bright path to follow,” Nichols said.

And the prospect of a funding source for mediators is appealing.

“With a ($500) additional fee, I would be able to hire someone full time (to mediate),” he added.

He remains concerned about those homeowners who don’t respond in a legal way to foreclosures.

Realtor Liz Finchum, who chairs the Madison County Save Our Homes Task Force, shares that concern. Finchum thinks the proposed legislation is a step in the right direction. However, she questions the stipulation that troubled homeowners must file a formal answer in court in order to qualify for mediation.

In her experience, many financially pressed homeowners are either too depressed or embarrassed about their situations to hire attorneys or bother with responses. Others are unaware of the mediation process or what it could mean to them.

Statistics would appear to back her up. In 2008, only about half of Madison County’s foreclosure filings drew any kind of legal response from homeowners. Without a response, a homeowner would not qualify for mediation under the proposed legislation.