It’s becoming the latest trend among local municipalities looking to stanch a growing number of foreclosed properties — foreclosure mediation, where a lender/servicer can’t foreclose until the local government says so. Under a new ordinance amendment passed Jan. 7, the city of Providence, Rhode Island becomes the latest in a growing line, and will go so far as to fine careless servicers $2,000 for foreclosing on a property before providing mediation to a troubled borrower. The city council amended Chapter 13 of the Code of Ordinances of the City of Providence last week and will be up for a necessary second passing on January 21. The council passed the original ordinance in July 2009, forcing banks to participate in a foreclosure mediation session supervised by an independent counseling agency. According to the latest report from RealtyTrac, which watches the trends of foreclosures across each state, one in every 687 homes in Rhode Island received a foreclosure filing through November, the 21st highest foreclosure rate. Under the original ordinance, the city’s recorder of deeds will not accept a foreclosure filing if the lender does not take certain steps. The lender must notify the city of its intent to foreclose on the property at the same time it notifies the homeowner. After filing the notice, the lender and borrower must schedule a counseling conference no later than 30 days after mailing the notice. If the homeowner does not respond after two attempts by the counseling conference coordinator, the counseling agency will authorize the lender to move ahead with the foreclosure proceedings. More than 14 states have adopted a foreclosure mediation program. The Florida Supreme Court ordered one before the new year, and the Minnesota attorney general announced plans to push a mediation program through the state legislature last week. Write to Jon Prior.

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