Faced with a dramatic increase in foreclosure filings in Milwaukee, last year the city launched a new mediation program.
The Milwaukee Foreclosure Mediation Program is administered by Marquette University Law School.
Pursuant to Milwaukee County Chief Judge Directive 9-14, foreclosures filed since July 22, 2009 must include a “Notice of Mediation” with the summons and complaint.
About 20 percent of Milwaukee’s foreclosure cases filed since then have utilized the program, estimates Marquette Law’s Amy Koltz, the Mediation Coordinator. That’s about 550 cases as of the end of January. Since mid-September, about 200 have proceeded to mediation.
“At this point, we're looking at 107 cases where homeowners have been able to stay in their homes,” Koltz says, noting that just 12 mediations have failed, while the rest are pending.
Attorney Debra Tuttle serves as the chief mediator. She says there's no better feeling than when a foreclosure case she has mediated ends with a homeowner asking to shake both her hand and that of the lender’s representative.
Tuttle conducts most of the mediations, with assistance from Koltz, Prof. Natalie Fleury, and a roster of trained volunteer attorney-mediators.
To be eligible for the program, borrowers must own and live in the property and must request mediation within 15 days of being served.
Both parties must consent to the process and pay a $100 administrative fee, and the borrower must meet with a HUD-certified housing counselor prior to the mediation.
The program’s start-up funding came from the City of Milwaukee, which kicked in $100,000, and the Wisconsin Department of Justice, which contributed $310,000 from recent successful litigation against Countrywide Financial Corporation.
Frequently, borrowers are unrepresented, says Koltz. On the lenders’ side, along with an in-person attorney for the bank, the representatives of loan servicers often appear telephonically because they’re in other states.
Deborah Blommer, a lenders’ attorney in Brookfield who sits on the program board, says she hasn’t participated in a mediation, but other lawyers at her firm, Blommer Peterman SC, have. They uniformly give the program high marks.
“It’s popular with our clients because more than anything, they want to get everybody at the table to figure out a solution to mitigate everybody’s losses,” she says.
Edward Harness, who represents borrowers, acknowledges that the program is well-intentioned. But he says it has its limitations.
“It’s not even a true mediation because you're not allowed to mention the merits of any defense that may be raised as part of the action. It’s more like a foreclosure loan modification settlement conference,” he says.
According to Tuttle, the program is looking to address that concern by adding a second track of mediation for contested cases. For now, however, the program’s main focus is cases where the default is conceded and losses are to be mitigated.
Wauwatosa lawyer Michael Maxwell, notes that the program’s effectiveness depends on “whether the person on the lender’s side of the table is a decisionmaker. In the civil litigation model, judges don’t hesitate to order that someone with … settlement authority be present at the mediation. That hasn’t happened in the foreclosure mediation system yet.”
The program has just begun accepting applications in Waukesha, Buffalo and Pepin Counties, and they are talking with other counties as well. The goal is to take it state-wide, says Koltz, noting that Attorney General J.B. Van Hollen expressed that sentiment when committing Justice Department funding to the project. But no timeframe has been set for that expansion.
One possibility is making mediation a statutory option.
2009 Senate Bill 255, introduced on Aug. 11, 2009 by attorney and State Sen. Lena Taylor (D-Milwaukee), would allow residential-property borrowers to seek mediation as a means of staying a foreclosure.
The measure would require the borrower to see a financial analyst for advice regarding the mortgage foreclosure, and lenders to “consider debt restructuring alternatives as a method of resolving the default.”