Three third-year University of Wisconsin Law School students can now provide counseling services to Dane County residents facing foreclosure on their homes through a mediation process starting today.
Homeowners will be notified of the option to have a mediation service to understand and outline different options for foreclosing the home with the lender.
The project is a new facet of UW Law School’s Remington Center, a law-in-action program fostering similar fieldwork in counseling actual cases, according to the project’s director Sarah Orr, clinical instructor in the law school’s Economic Justice Institute.
According to Orr, individual mediation cases will be referred through the case mediation program of the Dane County Bar Association. She and partner Marsha Mansfield, director of the Economic Justice Institute at the law school, arranged the project by seeking approval from Dane County judges.
“Students will help [homeowners facing foreclosure] to figure out what their options might be — to sit down with them and answer questions in a way they’ll understand,” Orr said. “We hope a lot of homeowners will contact the mediation process so they can decide if mediation is appropriate for their case.”
Orr added the process involves the students organizing homeowners’ papers, helping them to understand the available options and explaining what certain legal terminology means.
“The homeowners need to have good understanding of financial circumstances to see what options are viable for them,” Orr said.
The lender’s participation in the mediation process is at his or her discretion — lenders may or may not negotiate mortgage terms with the homeowner, she said.
“We’re looking a lot at the Marquette-Milwaukee foreclosure project. Their statistics show that roughly 17 to 20 percent of foreclosure clients are requesting the mediation process,” Orr said.
Orr added in Dane County there are 180 new filings a month for foreclosure.
According to UW adjunct professor of law Richard Heymann, much of the recent increase in homes facing foreclosure is due to lenient legislation.
“One of the big problems with this economic slump is the incredible increase in the number of people who borrowed bigger mortgages than they should have, mostly because it was available,” Heymann said. “The legislation compelled them to buy more than bare economic facts would have warned.”
Heymann added not all houses facing inability to pay the bills would be foreclosed. Because banks have full ownership of the house once the contract is terminated, the decision to issue a foreclosure can sometimes be avoided without necessarily hindering the bank’s financial stability.
“In the last several months or year there are an awful lot of homes in default that banks don’t prefer to foreclose on,” Heymann said. “It doesn’t necessarily deprive the bank of the loan payment if the borrower is able to once again start making payments [when the market recovers].”
Orr said while much still needs to be studied about the economy’s turbulence over the last couple years, mediation has proven productive around the country.
“In many places across the country they’ve found that mediation is helpful,” Orr said.