Leadership

Mediation program targets foreclosures

Chief Judge William D. Dyke

Chief Judge William D. Dyke's first surprise as he tackled the task of building a mediation program to handle foreclosure cases in Iowa County was the number of options available to help both lenders and homeowners.

"There are some thoughtful and appropriate responses to foreclosures," he said. "There's a lot of good to be gained for both sides through mediation."

Dyke said he had been discussing his concerns about the rise in foreclosures with Clerk of Circuit Court Carolyn Olson when they received a report giving county-by-county foreclosure numbers for Wisconsin. CCAP had created the report at the request of Chief Justice Shirley S. Abrahamson, who also had been concerned about the rise in foreclosures.

"The Chief Justice was an inspiration," Dyke said. "When she ordered that report containing all of the foreclosure numbers so we could see what was happening, I was convinced we needed to do something." Around the same time, Dyke also read articles about the problem in USA Today and the Wisconsin State Journal, and saw a report on MSNBC. "All of these things came together, and by the end of 2008, I knew where I wanted to go with this," he said.

Dyke's research took him in several directions. First, he recalled an old friend who had lived through the Depression mentioning that the law once required mediation in foreclosure cases. Sure enough: he found it in a 1935 statute book. That law had a sunset date, but Dyke has determined that Wis. Stat. 802.12 authorizes mediations. He also has relied upon federal case law, and looked carefully at how the state Department of Agriculture, Trade and Consumer Protection handles farm foreclosures. "They have a refined procedure in place, and quite a number of forms that are adaptable to our needs," Dyke said.

After his in-state study, Dyke looked around the country for models. Following up on a conversation with Judge James J. Duvall, Buffalo/Pepin County Circuit Court, Dyke found good ones in Ohio and New Jersey. "Ohio has been very, very helpful to us as we have designed our program," he said. "They have a foreclosure-mediation program that I believe is now in every county in the state, and it has been very successful."

Dyke then drafted a proposed local rule and sent it to 25 or so local practitioners for comment. "I received quite a few lengthy and very helpful responses," he said. He put the rule in place effective January 1. It requires that plaintiffs (lenders) notify defendants of the availability of mediation in foreclosure matters, and provides as follows:

Alternative Dispute Resolution (ADR) procedures … may be requested by either party. Upon request of either party, the Court will determine whether the case is appropriate for use of a settlement alternative and the judge may order the parties to seek a settlement alternative.

But building a mediation program takes more than enacting a rule. Dyke recruited local attorneys with backgrounds in real estate, business and tax law to serve as volunteer mediators. He now has a core group of between six and nine volunteers who have cooperated in training sessions. The volunteer trainers include top mediators, litigators, foreclosure experts and more.

"We are learning a lot about best practices, mediation techniques, even caveats to share with participants," he said. "For example, while the mediators do not give advice, they do alert homeowners that there may be tax consequences of debt forgiveness, and they advise them to check with an accountant or a tax attorney."

Less than half a year into the experiment, Dyke is enthusiastic about ADR's place in foreclosure cases.

"Mediation is good for both plaintiff and defendant," he said. "Most people don't know there are defenses to foreclosure, or if they do know, they don't know what to do. This program is about helping homeowners to understand that there are some remedies. It's also about helping lenders reach quicker resolution of these cases. There's no question that both sides can benefit."

The Iowa County Circuit Court rule that authorizes mediation in foreclosure cases is available here: www.wisbar.org/AM/Template.cfm?Section=Iowa_County1#foreclosure (external link).

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