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Mediation preventing many local foreclosures

Warren, Greene, Montgomery leaders say getting both sides to talk is key.

Tara Smith and her daughter, Shayla Woods stand in front of their home in Huber Heights. Smith,a single mother of three children, saved her home from foreclosure by working with CountyCorp in a new mediation program being piloted in Montgomery County. Staff photo by Jim Noelker

JIM NOELKER/MEDIATION PROGRAM Tara Smith and her daughter, Shayla Woods stand in front of their home in Huber Heights. Smith,a single mother of three children, saved her home from foreclosure by working with CountyCorp in a new mediation program being piloted in Montgomery County. Staff photo by Jim Noelker

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By Ken McCall, Staff Writer Updated 11:16 PM Sunday, January 9, 2011

Tara Smith is a believer in foreclosure mediation.

Montgomery County’s new Mediation Referral Program saved Smith’s Huber Heights home from the auction block.

Smith’s story is a familiar one to those who deal with foreclosures: A catastrophic event — in this case, illness — led to the loss of her job, she fell behind in her payments, and the bank foreclosed on her house.

Unlike many of these stories, however, Smith’s has a happy ending.

In 2007, Smith, 35, began losing sight in her left eye. She had to have a cornea transplant, but had no medical coverage or paid leave and lost her job. Besides the medical bills, the healing process took a year and forced her to stay out of work.

Smith, who now works as a secretary for the Montgomery County Board of Developmental Disability Services preschool, tried to work out a deal with Bank of America, but got nowhere. This part of her story is also familiar.

“It was just attempt after attempt,” Smith said. “It was me being told ‘Don’t worry about it. You’re going to qualify for this program, that program.’ ”

Then, after countless attempts, she got a letter saying she qualified for nothing and her three-bedroom brick ranch house was being put up for sale at foreclosure auction.

“It was actually up in July, and I had to go down and try to vacate the sale myself,” she said. “And that’s when I turned to CountyCorp.”

And that’s when Smith’s story took a less familiar direction.

‘They saved  my home’

The pilot mediation program, coordinated by CountyCorp Housing Manager Alfred Patterson, paired Smith with a housing counselor and into court-ordered mediation with the bank. She got a modification and now is making the lower payments.

“They saved my home,” Smith said.

Once you get people together at the table, Patterson said, deals can often be worked out — if the homeowner can show he or she can make payments. Patterson, who began organizing the program in August, said it has worked with 103 cases so far. He is getting ready to get the word out to the public that they have options other than walking away from a foreclosed home.

“Sometimes the homeowner’s biggest dilemma is the servicer (the bank’s representative) has not responded to anything,” Patterson said. “I’ve got cases right now that have requested modification as much as six months ago. And the servicers have never, ever made a decision. And we contact them weekly.

“Well, mediation is one way to break that logjam.”

Greene County has had a mediation system since 2008, although its program was officially established only last November.

Magistrates act as mediators, said Greene County Common Pleas Court Magistrate Raymond Dundes.

“In foreclosure cases where there’s an answer (an official response to the court from the homeowner) and somebody asks for mediation, or if the file contains anything that indicates the parties need to get together, we order mediation,” Dundes said.

The magistrates set the case in open court and then have the power to order banks and defendants to get together and talk. The magistrates follow up with telephone status reports or hearings, he said.

“We keep doing that until we get to a solid loan modification, or they realize they can’t keep the house,” Dundes said.

While none of the three counties contacted had yet compiled numbers for 2010, Dundes estimated that mediation was ordered in about a quarter of Greene County’s 815 foreclosures last year.

In Warren County, a year-old mediation program has grown out of an initiative by Common Pleas Court Judge Neal Bronson.

Bronson got local attorneys to agree to represent homeowners in foreclosure mediation for free, said Court Administrator Scott McVey. Now the attorneys are paid a nominal fee of $250.

McVey said the homeowner has to reply to the court within 28 days to qualify.

“In their response, they need to identify any possible way they can rectify the situation,” McVey said.

He estimates the program helped about 100 homeowners last year.

“Some people, they just can’t do it,” McVey said. “And the judge will not order mediation if it’s not going to be useful.

“But there are a lot of cases out there where folks have called and said: ‘We’ve made payment, yes it was late, but we can make payment,’ and they’re not accepting it.”

Mediation, he said, can work wonders.

“It’s bringing things to the table,” he said. “It’s something we’re pretty proud of.”

Some homeowners fear asking for help

The biggest stumbling block for many people is taking action, Patterson said.

“A lot of times the homeowner just doesn’t want to address the foreclosure,” he said. “They’ve received the complaint, but they haven’t opened the envelope because they’re dealing with, in their minds, much more pressing matters.”

What most people don’t understand, he said, is that if they don’t respond to the foreclosure complaint, the court has to assume that all the bank’s allegations are factually true.

“And usually they’re not,” Patterson said. “They may be from the bank’s point of view, but they don’t give the homeowner’s side of circumstances.”

If they don’t know how to respond, Patterson urges homeowners to pick up the phone — within 28 days.

“That means you have to open the mail,” he said. “If you want to retain the property — or exit the property with some dignity and control — you need to be part of the process. And if you don’t open the mail, you are not a part of the process.”

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