Kennedy: No money for foreclosure mediator

LYNN – Mayor Judith Flanagan Kennedy said there is no money in the city budget she is crafting to pay for a new foreclosure mediation program the City Council approved over her objections.”I cannot afford a mediator – the council can find money out of their budget,” Kennedy said.More than 150 mediation supporters jumped to their feet in the City Council Chamber and cheered this week when councilors voted 11-0 to override Kennedy’s veto aimed at squashing the mediation program.Kennedy, in her April 26 veto letter to the council, stated it is not the right of government to get involved with legally binding contracts, including agreements between buyers and loan holders.The mediation plan crafted and passed by councilors allows homeowners in foreclosure to discuss modifying their loans with bank representatives before foreclosures proceed. The ordinance prohibits banks from filing foreclosure deeds with the Southern Essex Registry of Deeds unless the deed includes a city certificate indicating attempts at mediation were made.”This is our chance to help people out,” Ward 6 Councilor Peter Capano said prior to the council’s override vote.The mediation ordinance becomes law in mid-June. Kennedy is sending councilors on May 24 an approximately $270 million city budget proposal that, she said, includes a 3.5 percent, citywide spending reduction that will not require municipal employee layoffs but will include a council spending reduction.”If the council can find the money (for a mediator), I have no objection,” she said.Kennedy said the budget also includes a 4 percent cut in the mayor’s office.Assistant City Solicitor James Lamanna said the city faces short-term and potential long-term costs associated with the mediation ordinance.The new ordinance directs the city to notify homeowners facing foreclosure and loan holders about the mediation program and arrange mediators. The ordinance calls for establishing a mediation registration fee, but city Inspectional Services Director Michael Donovan said the city already has an account set up to pay for city costs associated with foreclosed property.Established in 2009 as a depository for $300 foreclosure registration fees paid by banks and other mortgage holders, the account currently totals $100,000, Donovan said.Money in the account pays for city-hired contractors to repair, secure and maintain foreclosed properties not kept up by the property’s mortgage holder.Donovan is not sure the account can be used to pay for costs associated with the mediation ordinance.”I need to consult with the Law Department about expending it,” he said.Lamanna said city lawyers will contact the American Arbitration Association, a Boston-based mediation provider, to discuss costs associated with providing mediators. The ordinance does not assign a specific city employee to oversee mediation. Donovan said two ISD employees now spend part of their time making sure foreclosed properties are registered with the city and are being maintained.As of Friday, Donovan said 998 local properties are listed in city records as foreclosed. Another 145 are classified as vacant properties not registered by banks or mortgage holders with the city.”We’re chasing the banks to get the $300 owed on these. The intent is to keep nuisances from developing in neighborhoods,” he said.Lamanna said there “is a good chance” a bank objecting to the mediation certificate requirement will mount a legal challenge to the city ordinance within the next month. Kennedy agreed.”I expect there are likely to be legal challenges,” she said.Thor Jourgensen can be reached at [email protected].