Mediation program helps homeowners avoid foreclosure

Lake County Circuit Judge Mitch Hoffman of Highland Park has been stemming the tide of foreclosure suits one home at a time, taking his message about the court’s Mortgage Foreclosure Mediation Program on the road.

The countywide program began late last year with help from the Affordable Housing Corp. of Lake County. More than two-thirds of those who have taken advantage of the program have had some form of success.

“This benefits homeowners and the communities,” Hoffman said at an Aug. 4 meeting in Deerfield. “Since the foreclosure crisis began there have been more than 10,300 cases of residential foreclosures filed in Lake County.”

There were 5,184 suits pending as of Aug. 5.

While some areas of the county have been hit harder than others, homeowners in Lake Forest, Highland Park, Deerfield, Bannockburn, Riverwoods and Highwood have not been exempt.

Though precise figures are not available by community for current foreclosures, there were 174 cases filed against homes in those towns in 2013, according to the Woodstock Institute. In those communities, 97 houses were sold at auction last year. Woodstock is a nonprofit dedicated to fair lending practices.

In 2013, there were 64 cases filed in Highland Park, 39 in Lake Forest, 33 in Deerfield, 13 each in Lake Bluff and Riverwoods, nine in Highwood and three in Bannockburn, the Woodstock Institute reports.

During the same period, 37 auctions were held in Highland Park transferring title as a result of a foreclosure, 20 in Lake Forest, 15 in Deerfield, 10 in Highwood, eight in Lake Bluff, six in Riverwoods and one in Bannockburn, according to the Woodstock Institute.

Hoffman first got the idea for the program after the courts became overloaded with foreclosure cases. When a homeowner is unable to make mortgage payments, a lender who wants to take title to the property must do so by getting a judgment of foreclosure in court. The program brings the homeowner and lender together to facilitate a settlement, if possible.

“The mediation program is for the purpose of creating an alternative to foreclosure such as a loan modification,” Hoffman said. “Once a homeowner opts into the program, it stops the foreclosure process.”

He also said that if the mediation fails, the foreclosure continues. Sixty-seven percent of mediations have been successful.

One of two Lake County judges who handle most of the foreclosures, Hoffman has seen how difficult it can be for a homeowner who wants a modification. Often times there are lender paperwork issues and difficulties finding a representative of the lender with the authority to change the terms of the loan.

The first thing homeowners who want to go through mediation must do is get some counseling from the Affordable Housing Corp. of Lake County. They attend a general information session and then have a second get-together with a counselor.

“It’s a really huge benefit,” Hoffman said. “The counselors make sure all the documents are in order and get them ready for the mediation.”

The mediation itself puts homeowners, lawyers, lenders and independent mediators in the same room to try to arrange loan modifications or other resolutions.

“The bank must have somebody in the room or available by phone who has authority to approve a loan modification. This is the key,” Hoffman said. Sometimes there is a different result. “Not every case results in a loan modification.”

A homeowner may agree to give the lender title to the property to avoid a foreclosure on the record and the bank may agree to a sale of the house where it gets less than all the money due, Hoffman said.

“This gives the homeowner more certainty,” he said.

Homeowners having difficulty making mortgage payments have gotten relief by seeking help from the Affordable Housing Corp. before any lawsuit is filed. Since it was established in 2000, the organization helped 30 to 40 people a year until the economy tanked, President Lisa Pugliese said.

They put people through the same type of counseling they would get in the mediation program putting paperwork in order. In this case, the counselor is communicating directly with the lender to arrange a modification.

“We try to keep them out of foreclosure with a loan modification,” Pugliese said. “They are dealing with someone with knowledge.”

From Jan. 1, 2012, to July 31 of this year, Pugliese’s organization has helped 440 homeowners try to avoid a foreclosure suit, including four in Lake Forest, four in Lake Bluff, three in Deerfield and two in Highland Park. Of the 440, only six resulted in a foreclosure.

2013 Home Foreclosure Statistics

Town                         Foreclosures                                   Auctions

Bannockburn                          3                                                  1

Deerfield                                 33                                               15

Lake Bluff                               13                                                 8

Lake Forest                            39                                                20

Highland Park                        64                                                37

Highwood                               9                                                 10

Riverwoods                           13                                                 6

 

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