Foreclosure Mediation: Responding to the Current Crisis

• Author: Jacqueline C. Hagerott
• Position: Manager, Dispute Resolution Section, Supreme Court of Ohio
• Pages: 899-934

FORECLOSURE MEDIATION: RESPONDING TO THE

CURRENT CRISIS

JACQUELINE C. HAGEROTT∗

I. INTRODUCTION

When the foreclosure crisis hit Ohio, both the executive and judicial

branches of government took action to counter the crisis. The governor’s

response to the cris is was to form a task force to study the crisis and make

recommendations on how Ohio might stem it. The recommendations of

the task force led to the creation of the Save the Dream Ohio initiative.

While the executive branch turned to task forces and initiatives, the

judicial branch opted to develop foreclosure mediation programs to

manage an increased caseload due to the increasing number of

foreclosures. Chief Justice Thomas J. Moyer proposed that mediation be

used to manage the increased caseload; the Supreme Court of Ohio then set

about to create a model for the lower courts to follow when designing a

local foreclosure mediation program. Several months later, the Chief

Justice announced the Foreclosure Mediation Program Model (the Model);

the Model is the first of its kind in the United States.

The Model developed in Ohio provides a model not only for Ohio

courts but also for other states wishing to implement mediation in

foreclosure cases. The Model consists of eleven steps and provides an

efficient and thorough approach to designing a foreclosure mediation

program. The Model considers who the stakeholders will be in the

mediation, state laws and local rules, and provides a suggested timeline for

the mediation program from pre- to post-mediation steps.

Nearly every county in Ohio now offers foreclosure mediation based

on the Model developed by the Supreme Court of Ohio. As the counties

Copyright © 2012, Jacqueline C. Hagerott.

∗ Manager, Dispute Resolution Section, Supreme Court of Ohio. J.D./LL.M., Capital

University Law School; B.S., The Ohio State University; A.A.S., Bismarck State College.

This article is based on the author’s experience and represen ts the views of the author, not

those of the Supreme Court of Ohio. The author is grateful for the contributions and

invaluable assistance of C. Eileen Pruet t, Manager, Small Claims Division and Dispute

Resolution Department, Franklin County Municipal Court, Columbus, Ohio; Thomas

Wang, Case Mediator, Dispute Resolution Section, Supreme Court of Ohio; Jennifer

Herman, student at the Moritz College of Law, Th e Ohio State University; and Alyssa

Phillips, student at Capital University Law School.

900 CAPITAL UNIVERSITY LAW REVIEW [40:899

implemented the Model, the Model’s designers and implementers learned

which aspects of the eleven-step Model and which general mediation

concepts to emphasize in future implementations. Over time, the Model’s

designers developed a checklist to implement it successfully.

Section II of this article provides an in-depth look at the history behind

the Model’s creation. Section III discusses process and procedure of a

mediation program. This section illustrates how local needs and state laws

may affect foreclosure mediation processes; Ohio provides an example of

these effects. After Section III dis cusses how local conditions may affect a

foreclosure mediation process, Section IV discusses the need for a local

court to standardize its own documents and forms. Though local

conditions may affect not only the program design but also which

documents and forms a program uses, the documents and forms should not

vary from mediation to mediation within a local program.

Section V then tackles the issue of training and ongoing professional

development for the mediators in a foreclosure mediation program.

Section VI details the eleven steps of the Model. Section VII thoroughly

discusses the aspects of the Model and general mediation concepts that

implementers should emphasize, as well as the implementation checklist.

Section VIII briefl y discusses proj ected trends in measu res designed to

counter the foreclosure crisis.

II. HISTORY OF FORECLOSURE MEDIATION IN OHIO

Former Governor Ted Strickland established the Foreclosure

Prevention Task Force (Task Force) in March 2007 to provide a unified

and coordinated statewide response to the dramatic increase in foreclosures

in Ohio.1 The Task Force issued its report in September 2007 with twenty-

seven recommendations on how Ohio could stem the foreclosure crisis.2

The number one recommendation of the Task Force was to create and

conduct a public awareness campaign and conduct “borrower outreach

events to encourage borrowers to contact their lender if they are facing an

[adjustable rate mortgage] reset or if they are having trouble making their

mortgage payment.”3 In March 2008, this recommendation led to Save

1 OHIO FORECLOSURE PREVENTION TAS K FORCE, FINAL REPOR T 1, 6 (2007), available at

http://www.com.ohio.gov/admn/docs/FPTFFinalReport.pdf (“$1 trillion in adjustable rate

mortgages are expected to reset nationally, in cluding an estimated $14 billion in Ohio” from

2007–2012).

2 Id. at 1.

3 Id. at 4.

2012] RESPONDING TO THE CURRENT CRISIS 901

the Dream Ohio (SDO), a multi-media foreclosure prevention initiative

that aims to help Ohioans save their homeownership dreams.4

In addition to the Task Force organized by the former governor, Chief

Justice Thomas J. Moyer proposed in late 2007 that Ohio courts develop

foreclosure mediation programs to manage the increasing number of

foreclosure filings. Mediators in these foreclosure mediation programs use

a facilitative approach, meaning that the mediator is a neutral third party

rather than an advocate for either and serves as a guide to the parties. The

mediator leads the parties through a party self-determination process to

explore possible resolutions to the foreclosure and to see if the parties can

reach a mutually acceptable agreement to resolve the foreclosure.5

Then, in February 2008, Chief Justice Moyer announced an innovative

new model called the Foreclosure Mediation Program Model—the first of

its kind nationally.6 The Model contains eleven steps (outlined below) that

were designed by a workgroup made up of stakeholders listed in Step One

of the Model and led by the Dispute Resolution Section of the Supreme

Court of Ohio.7 The Model

follows the rules of civil procedure, consistent with all

other civil cases, while giving borrowers the same access

to mediation that has been regularly available for other

case types for more than a decade. Ohio has learned that

mutually beneficial agreements do not always result in

keeping people in their homes. In some cases, an

agreement that is both commercially reasonable and

sustainable over time cannot be achieved. However,

4 See SAVE THE DREAM OHIO, SAVE THE DREAM 2009 ANNUAL REPOR T, available at

http://savethedream.ohio.gov/docs/SVTDAnnualReport.pdf.

5 Foreclosure Mediation Program Model Overview, THE SUP. CT. OF OHIO, http://www.

supremecourt.ohio.gov/JCS/disputeResolution/foreclosure/overview.asp (last visited Feb.

20, 2011) [hereinafter Model Overview].

6 Id.

7 Id. Step One of the Model describes “a meeting with stakeho lders such as: judges;

magistrates; lenders; attorneys for borrowers and lenders; community organizations;

mediators; legal aid organization; clerk of courts; county auditor, treasurer and/or

commissioners; local social service agencies; commun ity organizations such as churches,

homeowner’s and bank associations, etc.” to discuss foreclosure mediation. Foreclosure

Mediation Resources, Foreclosure Mediation Program Model, THE SUP. CT. OF OHIO,

http://www.supremecourt.ohio .gov/JCS/disputeResolution/ foreclosure/ (lasted updated Oct.

2009) [hereinafter Foreclosure Mediation Resources].