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Program aims to ease Walworth County home foreclosures

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Darryl Enriquez
January 16, 2011
— Walworth County Judge John Race opened a mountain-size dictionary to research the origin of a word that he’s reading more often than he cares to these days.

The word is “mortgage.”


It’s of French origin and means “dead debt” or “death pledge,” Race said with a slightly baffled look.


Likely, the irony gave him pause.


Walworth County mortgages have been dying in record numbers.


In 2010, more than 800 mortgage foreclosures were filed in Walworth County and 28,000 statewide, according court records. A financial instrument that once provided the working class with the hope of home ownership is now tainted as an assassin of the American dream.


Alarmed by the numbers, Race and a handful of local lawyers and financial advisors have started a mediation program intended to give homeowners a fair shake when facing foreclosure.


Race said his court is flooded with “rock solid” people who face the loss of their homes.


Those homeowners can no longer make mortgage and property tax payments for reasons beyond their control, he said.


Race reported he once had a pile of foreclosure lawsuits in his chambers that measured 4 feet high. He said he’s grown tired of seeing the tears of men and women who feel helpless, hopeless and potentially homeless.


He wanted to do something to set their minds at ease, give them some sense of protection and security.


To help homeowners navigate the complicated foreclosure process, which often befuddles attorneys, the Walworth County Foreclosure Mediation Program was developed from a model crafted by attorneys Natalie Fleury and Debra Tuttle at Marquette University Law School.


It began last summer after Race got a call from Elkhorn attorney John Maier, who was alarmed with the rising number of foreclosures.


“There is no hiding from the fact that the economy has been in recession and that we are living in a period of sustained high unemployment,” Maier said, “Everyone knows someone that has either lost their job or is afraid of losing their job.”


Maier and other local attorneys began researching what could be done to mediate with mortgage lenders to resolve or slow foreclosure actions so the affected could, if needed, make a “graceful exit.”


A common obstacle in resolving pending foreclosures is reaching someone from a lending company who can negotiate a settlement. Mortgages are bought and resold on financial markets, making it difficult to track down a lending official with authority to resolve an issue, Race said.


Some homeowners have only the general telephone number of the lending company that wants to foreclose, Race said. Since the foreclosure mediation program started, foreclosure actions are not allowed to go forward unless homeowners and lenders have attempted mediation.


Race said it’s Wisconsin’s progressive laws that prevent homeowners from being tossed onto the street if they miss mortgage payments.


The mediation model is used successfully by Milwaukee County, Race said.


Rock County started a similar program in late 2009.


The program launched in Walworth County on Nov. 1, after the four Walworth County judges approved its use. It accepts only new foreclosure cases and has 15 participants.


The volunteer program is only for mortgages held by homeowners who occupied their home. It’s not for real estate speculators, he said.


Maier credits attorney Dave MacDougall of Janesville, Walworth County Clerk of Circuit Court Sheila Reiff, housing credit counselors at Community Action and the Walworth County Bar Association with putting the program into action.


Mediators have no direct power. They attempt to persuade creditors to resolve issues and help clients understand their dilemmas, Maier said.


The program begins with counselors identifying the financial situations of homeowners and seeing whether federal, state or local programs can help.


After that, a proposal is taken to mediation. The homeowner and the lender meet with a mediator, who helps them reach an acceptable settlement.


“The goal is simply to help both the people who live in a home and the lender who holds a defaulted mortgage on that home to work out an agreement that is in the best interests of both sides and that avoids a full court proceeding,” Race said.


“In many cases, mediation leads to people keeping their home under new financial terms, although it sometimes means finding a graceful exit for the homeowner,” Maier said.


“There are no good guys. There are no bad guys. There are only problems to be solved.”



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