Civil Mediation for Home Foreclosures in St Louis County
Wednesday, September, 5, 2012
A foreclosure mediation bill passed this week in St. Louis County. This is a form of civil mediation that helps families in financial trouble. It can also help banks keep from losing out on money.
How does this new mediation measure help out the average family, and why are some banks against it? Read on to find out.
How Mediation Services Can Help Banks and Residents
The new measure will require banks to enter into a formal mediation session with homeowners before it forecloses on them. This can help both parties in a variety of ways.
It can help the homeowners by putting them in front of a single individual who has the power to make a deal on the bank's behalf. One frustration aspect of dealing with banks and loan companies is that homeowners will often not talk to the same person twice about any given issue. This makes it extremely difficult to modify or refinance a home loan.
Banks also may save money in the deal. Foreclosed homes can actually cost a great deal of money for a bank in maintenance and other costs. Chris Krehmeyer, director of Beyond Housing, suggests that each foreclosure avoided could save a bank $30k-$40k.
Some Banks Argue Against Foreclosure Mediation
Some banks are claiming that the mediation measures will create extra costs for banks, ultimately making loans more difficult to get for new homeowners.
One of these costs is the fact that homeowners do not have to hire a mediation attorney; rather, the banks will be subject to any costs for mediation services. They will also have to pay a $1,000 fine if they do not go through with the service.
Supporters of the measure say that this has not been the case in Madison County, IL, which is right next door to (and across the Mississippi River from) St Louis. They also claim this measure has been enacted in several places throughout the United States (OR and IL being just two places) without any visible drop in new home loans.