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St. Louis County, Missouri Foreclosure Mediation Program is Not Popular Among Bankers And Realtors

Tuesday, February, 5, 2013

St. Louis County, Missouri, has recently been the target of the Missouri Bankers Association, a top banking association in the state, in an attempt to end the county’s foreclosure mediation ordinance passed last year.  According to the ordinance, distressed homeowners facing foreclosure have been able to enter into foreclosure mediation talks with the lender in order to attempt to keep their home.  If the lender or loan servicer fails to agree to such talks, they are charged a penalty; in addition, the loan servicer is required to pay for the mediation proceedings.   

The program has received so much praise that several new members of the Senate are attempting to push legislation that would take such foreclosure mediation programs statewide.  According to proponents of foreclosure mediation, such efforts assist distressed homeowners when faced with an otherwise fast-ending foreclosure process within the state.  Opponents, however, are opposed to increased regulations on the institutions, who have lent the money and are already facing costs in having to recoup the home.  Other opponents such as the St. Louis Association of Realtors claim that such ordinances have a negative impact on the local real estate market. 

The MBA has filed a lawsuit in an attempt to thwart the ordinance and there is currently an injunction against St. Louis County, forcing them to halt enforcement of the ordinance until a ruling has been given.  The organization is also backing a current bill being considered by the legislature, which states that “enforcement and servicing of real estate loans secured by mortgage or deed of trust or other security instrument shall be pursuant only to state and federal law.” According to the language of the bill, no local entity or ordinance “may add to, change, delay enforcement, or interfere with, any loan agreement, security instrument, mortgage or deed of trust.”

Charlie Dooley, a Democrat and St. Louis County Executive, has supported foreclosure mediation from the beginning of the foreclosure crisis several years ago.  According to Dooley, “It was the county’s intent in approving the mortgage foreclosure intervention code to protect the interests of homeowners and give them a fair shot at resolving their financial concerns.  But if the state of Missouri feels otherwise, maybe they and the banking interests can explain to our residents why this relatively inexpensive cost of mediation is unnecessary.”