| 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 and in August, 2009 alone there were more than 600 new filings. 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 response 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 of residential properties. The mediation brings lenders, borrowers and housing counselors into her courtroom to discuss alternatives to foreclosure. The process has been so successful that the program gained national attention and has been modeled 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 they will schedule the matter for mediation. Mediation conferences will take place once a month in each of the county courthouses. The parties will appear at the courthouse for the scheduled mediation day and attempt to informally work out an agreement to avoid foreclosure. If the parties cannot work out an agreement they will meet with a pro bono attorney mediator who will attempt to bring the parties to some type of consensus agreement. If an agreement is reached it is filed with the Court. If no agreement is reached the lender may proceed with foreclosure.
The success of the program is based upon the face-to-face negotiations between the lender, the borrower and the housing counselor. Both lenders and borrowers complain they cannot 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. This mediation process will require the lender to be present with authority to make a deal. Bringing the parties together to talk humanizes the situation according to Judge Rizzo and typically some type of agreement can be reached.
The first mediation conferences are scheduled on October 26th and 27th in Kent and Sussex Counties respectively. The conferences in New Castle County will take place on November 4th at the New Castle County Courthouse. CLASI will continue to facilitate this effort. We will run the mediation conferences and report the program statistics to the Court. The steering committee will continue to meet on a regular basis to oversee the process.
We have great hopes for this program and we hope that it saves many homes. CLASI extends its thanks to JP Morgan/Chase, Discover Bank and ING Direct for their support of this project.
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