Foreclosure and Mediation Ordinances in St. Louis and St. Louis County

Recently, the Missouri State House of Representatives passed a bill that would supersede the ordinances requiring mediation before a lender forecloses on a home in St. Louis or St. Louis County. The bill is now being sent to the Senate and would likely prevent the city and county from enforcing their ordinances.

The ordinances requiring mediation before foreclosure that were passed by the city and county are nearly identical. Each ordinance requires the lender to offer mediation to the borrower before initiating foreclosure on a home. The costs associated with mediation are the responsibility of the lender and the lender risks penalties from the city or county if they fail to offer mediation. The city ordinance would impose a $500 fine if the lender fails to offer mediation and the county would cost the lender $1000 for failure to offer mediation. The main goals of the ordinances are to try to keep people in their homes and to avoid mistakes that sometimes occur that lead to improper foreclosure. Mediation also offers the parties a chance to come to an agreement with the help of the neutral third-party overseeing the talks between the lender and borrower. However, the parties are not required to follow the advice or decision of the mediator and the lender is free to foreclose if mediation does not render an agreement.

However, the ordinances are currently being challenged by different lenders in St. Louis area courts. The county ordinance, which was passed and amended late last year, is being appealed in the Eastern District of the Missouri Court of Appeals and that court has ordered the county not to enforce the ordinance while the appeal is pending. The city’s ordinance, passed in February, has been halted by a temporary restraining order from the St. Louis Circuit Court and is expected to remain in place until the Court of Appeals makes a decision on the similar county ordinance. It is common for a lower court to take a “wait and see” approach when a similar law or issue is being decided by a higher court. The decision of the Court of Appeals is expected to be appealed to the Missouri Supreme Court and the final decision on the ordinances will likely not be made for many more months.

The state law bill that would nullify the ordinances will likely face adversity in the Missouri Senate. Many senators have already come out against the bill and there is no guarantee the Senate will pass the bill even after an overwhelming vote in favor of the bill in the House of Representatives. St. Louis County Executive Charlie Dooley, a big supporter of the mediation ordinance, has stated he will fight the state bill and may seek legal action if the bill is later passed in the Senate and signed into law.

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