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Missouri Supreme Court Strikes Down County Foreclosure Mediation Ordinance

Wednesday, December, 3, 2014

A St. Louis County ordinance adopted at the height of the housing crisis that required creditors to post non-refundable fees to cover the costs of a mandatory mediation between homeowners facing foreclosure and lenders has been overturned by the Missouri Supreme Court.


The ordinance, adopted in 2012, required creditors seeking foreclosure to post a fee of $450 for a Mediation Coordinator who would attempt to find a non-foreclosure solution.  $100 of the fee was nonrefundable.  The purpose of the ordinance was to encourage owners facing foreclosure to remain in the property instead of abandoning it as a loss, resulting in swaths of abandoned and unmaintained property.


Critics expressed the belief that the fees were also designed as a way to buttress county income as property tax revenues were dropping.


The ordinance was only enforced for a few months before legal challenges secured court orders forcing the county to suspend the project.  The Supreme Court ultimately found that the County had exceeded its authority, with the lead opinion stating that local authorities did not have the authority to enact broad legislation such as the mediation program.  However, the ruling was not unanimous, and at least one justice took the opposite opinion, stating that the mediation program was within county authority.


It is unclear if any of the lenders can expect to receive a refund of the fees already paid, or if the county will attempt to revise the ordinance.