In an update from a previous post, a bill that would prevent local governments from being able to require lenders to offer mediation to homeowners facing foreclosure is nearing passage in the Missouri Senate. The bill, passed by the Missouri House of Representatives a few weeks ago, would directly oppose ordinances passed in St. Louis and St. Louis County over the past few months. If the Senate passes the bill, it would soon make the St. Louis ordinances null and void.

                A Senate committee approved House Bill 446 last week after a review. The bill now awaits an official vote by the entire Senate. Basically, the bill would prevent local governments in Missouri from adding requirements to agreements between lenders and borrowers in real estate transactions. This preventative measure directly opposes the St. Louis and St. Louis County ordinances that provide for the option of the borrower to elect mediation between themselves and their lender when a foreclosure is imminent.

                The St. Louis area ordinances seek to prevent mistakes, hardships, and economic loss that all occur during the foreclosure process. In a foreclosure, the lenders don’t simply get the property back that they lent the money for the borrower to purchase. The lenders argue that they suffer from the added costs of going through mediation and that the process usually just delays an inevitable foreclosure. However, if mediation is successful and the loan is modified to terms that the borrower can afford to pay, the lender is back on track to collecting the remaining balance on the loan. The process of getting the foreclosure is much more costly. There are court costs, legal fees, and ultimately the loss incurred when the property almost always sells for well below the original purchase price or its current market value. The lenders are not the only party to a foreclosure that faces financial burdens. The homeowners also face moving costs, legal fees, and the loss of the investment they had made in their foreclosed home. The economic loss, however, is sometimes nothing compared to the stress and anguish involved in a family losing the place they called home, moving away from family and friends, and children changing schools.

                Neighbors also lose out when someone in the neighborhood loses their home to a foreclosure. The foreclosed property oftentimes isn’t maintained properly, due to the homeowner not being able to afford it or because the property sits empty with no one to keep an eye on it. Property values in the neighborhood suffer when this happens and are especially hurt when the selling price of the homes is far less than what it should be.

                If you believe you are in danger of facing a foreclosure and would like to know more about your options with bankruptcy, or if you have any other questions about foreclosure and bankruptcy, please contact our offices to see if bankruptcy may be an option for you.