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New mediation program brings lenders, homeowners together

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Photo by Dan Lassiter

Victoria Bradsher saved this home in Beloit from foreclosure through a new mediation program.

Photo

Photo by Dan Lassiter

Victoria Bradsher in the kitchen of the home she has owned since 1992. The heights of her grand children and nieces and nephews are etched in the kitchen doorway. A new mediation program saved the home from foreclosure.

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JANESVILLE — Victoria Bradsher’s mortgage company once kept on hold so long—79 minutes—that she called the company on second phone to remind representatives she was waiting on the other line.

That was one of frustrating episodes she endured after the company last year wrongly started a foreclosure action on her Beloit home.

She eventually got help through Rock County Foreclosure Mediation—a new program suggested by judges and staffed by volunteer lawyers and bankers that forces lenders and homeowners to communicate.

Rock County Judge Ken Forbeck said judges were seeing frustrated homeowners who had tried but couldn’t communicate with their lenders.

People wanted to save their homes but couldn’t find anyone at the mortgage companies to negotiate with, he said.

Sometimes, homeowners didn’t even know who held their loans because the mortgages had been bundled and sold. Many times, the companies couldn’t even find the original paperwork. Homeowners often were told to repeatedly send the same documents.

‘There’s a hammer’

Forbeck learned of a mediation program working elsewhere in the state. Larry Barton, a Janesville attorney, volunteered to put the program together.

“The homeowners would show up in court and express their frustration,” Barton said. “They didn’t know what was going on. They didn’t understand it legally, and from a practical standpoint, they could not even talk to anybody to tell them they’d like to work to keep their house.

“With that frustration also came a certain degree of lack of judicial control.”

Barton solicited the help of five other attorneys and two retired bankers.

The mediation program, which began late last year, gives judges more control and facilitates communication, Barton said.

Now, when a lender starts a foreclosure, the court gives the homeowners and lenders the option of mediation.

Mediation typically takes one to two hours. Each side pays $100.

Barton said he can talk to attorneys representing the lenders differently than the homeowner can. He can tell the mortgage company’s lawyer, for instance, that the company already has received paperwork the lawyer is requesting.

“The beauty of the order for mediation is it’s a court order,”” Barton said. “This imposes an obligation on the bank or the financial institution.

“We’re armed with some authority.

“Ultimately, if foreclosure can be avoided, it can be a benefit to both sides,” Barton said.

“There’s a hammer here,” Frobeck said. “I don’t sign any more documents until mediation has been completed.”

Better communication

Barton said he’s drawn to help people who find themselves in desperate situations.

“You can only imagine the frustration of somebody who is going through hard times and wants to keep their house if they can—to have a roof over their heads—and then not being able to communicate with somebody because they won’t return your call or you can’t figure out who to call to talk to.”

The mediator decides which cases to accept.

“It doesn’t make sense to mediate those cases in which it’s absolutely impossible to work something out,” Barton said.

That’s where Consumer Credit Counseling Service comes in, and both Forbeck and Barton speak highly of the agency.

Certified credit and housing counselors offer free services for homeowners through a federal grant. The agency agreed to meet with homeowners and determine if it makes financial sense for them to keep their homes.

Counselors have experienced similar frustrations and delays in working with lenders, counselor Christina Jensen said. They, too, make call after call and are asked to mail the same documents over and over. Jensen was once on hold for three hours with the Bank of America. She was transferred, put on hold and ultimately got the wrong information.

Counselors were thrilled to learn of the mediation program.

Jensen also accompanies the homeowner to mediation.

“Communication on both sides is necessary to resolve the issues,” she said.

“Sometimes, with large lenders, it’s really difficult. That’s why mediation is so crucial.”

‘I couldn’t sleep’

Victoria Bradsher is an example of a foreclosure that never should have happened, Jensen said. The Beloit resident did everything right.

Today, Bradsher beams in the cozy, 850-square-foot Sears kit home. She remembers how excited she and her children were when she bought it in 2000.

But she spent last year worrying whether she could keep it. In July, she was floored to learn her lender had started a foreclosure action.

The mess started when Bradsher was late on a payment after surgery early in 2009. In February, she worked out an agreement with American Home Mortgage Services to skip two payments and make them up later.

She was supposed to get the contract Feb. 19. When it arrived Feb. 24, she signed and dated it the same day and sent it back.

Two months later, the company refused to take her payment over the phone. In July, after dozens of phone calls and attempts to make payments, she finally learned why: The contract was void because she had changed the date.

She made months of phone calls to try and find the right person at the company. She documented everything in a folder that grew to be inches thick. Once, a representative refused to talk to her because she was no longer listed as the owner of the home.

“I had the money, I just couldn’t pay it,” Bradsher said.

Soon, she was five payments late.

“I was so stressed because I couldn’t sleep,” she recalled.

She had panic attacks and went to the hospital with anxiety-induced chest pains.

She put several unfinished home improvement projects on hold. Her brother told her that if she had to move, she could take the doorframe with its stickers and markers that document the growth of family members.

Bradsher was relieved when she finally went to court, believing someone would at least listen to her.

In November, Bradsher was one of the first to be admitted to the mediation program. David MacDougall mediated when she met with the lender’s lawyer.

The lender’s lawyer looked at Brasher’s documents, none of which she had ever seen. She dismissed the case with one phone call. The company wiped out the late payments and fees.

Jensen helped Bradsher, who recently was laid off, to get into a new federal program that qualifies her for a low-interest loan. It also pays $1,000 each year for five years to reduce the principal.

Today, Bradsher is making plans to finish hanging wallpaper in her kitchen. She’s thankful for the mediation program and counseling service and cannot speak highly enough of either.

Forbeck said several dozen cases have progressed to mediation and several homes have been saved since the program began.

Just the presence of the mediation program has “magically” resulted in about 40 percent more mortgage holders willing to work things out, he said.

“It’s worked out for the homeowner, and that’s what we were looking for,” Forbeck said.

“What I really wanted to do was give them a chance.”