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Government, Politics & Issues

Nixon lets bill eliminating foreclosure mediation programs go into effect

This article first appeared in the St. Louis Beacon, July 12, 2013: Gov. Jay Nixon let legislation wiping out foreclosure mediation ordinances in St. Louis and St. Louis County go into effect without his signature. It’s a move that effectively nullifies a major priority of housing advocacy organizations – and the region’s two top political leaders.

Nixon took no action HB 446 & 211, which essentially abolishes foreclosure mediation ordinances in St. Louis and St. Louis County. It would also prevent other jurisdictions from setting up similar programs. The ordinances in question would allow a homeowner in foreclosure to enter into mediation with the lender and a neutral third party

Besides requiring lenders to pay for mediation, St. Louis County’s ordinance would set a $1,000 fine for a “person, firm or corporation convicted of violating any provision.” The city's ordinance is similar, although it would levies a $500 fine for noncompliance.

While advocates of mediation note that the process doesn't automatically stop a foreclosure, they say that it can catch mistakes and may keep people in their homes.

But supporters of the legislation – sponsored by Rep. Stanley Cox, R-Sedalia, and House Majority Leader John Diehl, R-Town and Country – say the city and county ordinances add another layer of regulation and cost for banks and could hurt the real estate market.

Banking and real estate industries made passing Cox and Diehl’s bill a major priority this session. Both ordinances are also being challenged in court. William Ratliff, a lobbyist for the Missouri Banking Association, told the Beacon earlier this year that it could take months to get that litigation resolved.

After Nixon took no action on the bill, Ratliff told the Beacon that his group was “delighted with the lack of the veto by the governor.”

“Our concern was that if we didn’t get something done either in the courts or the legislature, this would really be a mess for the state trying to keep track of local, city and county ordinances – as well as state and federal banking ordinances. It would just be a nightmare,” Ratliff said

During a press conference in Jefferson City, Nixon explained in general terms why he didn't take any action on several bills -- including Cox and Diehl's legislation.

"On all four of those measures, I understood the realities of where we were but did not want to affix my signature to do those," said Nixon, noting that the bills passed with overwhelming majorities.

"It's one of the rights to the position," he added. "If you don't want to make something law by signing it, you don't do it.

Advocates of programs – including St. Louis County Executive Charlie Dooley, St. Louis Mayor Francis Slay and groups such as Beyond Housing – contend that mediation could keep distressed homeowners from losing their homes or catch mistakes in Missouri's traditionally quick foreclosure process.

While Cox and Diehl’s bill passed by overwhelming margins, it was opposed by such St. Louis-area lawmakers as Sens. Mara Chappelle-Nadal, D-University City, and Gina Walsh, D-Bellefontaine Neighbors, who expected and urged a veto.

Councilwoman Hazel Erby – a University City Democrat who sponsored the county’s foreclosure mediation ordinance – told the Beacon she was “extremely disappointed” by Nixon’s decision.

“I had hoped that he’d come out on the side of working families and children,” Erby said. “But he didn’t.”

Going forward, Erby said she hoped some of the county’s banks would voluntarily go through mediation with distressed homeowners. Earlier this year, the Consumer Financial Protection Bureau announced a number of new guidelines for mortgage services aimed at preventing foreclosures.

“Some of them are willing to do mediation and meet with the borrowers,” Erby said. “Now we’ll just call them on it.”

Slay spokeswoman Maggie Crane said “it’s one of those things where it’s just a shame.”

“This was nothing more than (bringing) people to the table and it has proven effective at helping people stay in their houses,” said Crane, alluding to how the mediation program was helpful in the county before it was frozen by the courts. “We think this is a step in the wrong direction.”

Nixon finishes bill action

While Nixon had until July 14 to sign or veto bills, he decided to conclude his decision-making process on Friday. And Cox and Diehl’s legislation was one of several bills that Nixon let go into effect without his signature.

Abortion

The most controversial bill was HB 400, which among other things would require a doctor to be present when somebody takes RU-486, a drug that induces abortion. While some abortion rights groups were urging a veto, Nixon has often let abortion restriction bills go into effect without his signature, as was the case again with this bill.

Prevailing wage

Nixon also let go into effect HB 34, which would eliminate prevailing wage requirements for school construction and public works projects in third- and fourth-class counties. The bill’s sponsor – Rep. Casey Guernsey, R-Bethany, told St. Louis Public Radio that his legislation was necessary to spur school construction in rural counties. 

Lieutenant governor and appointments

But Nixon vetoed legislation – HB 110 – to change the succession process for the lieutenant governorship. Among other things, it would stipulate that the office would remain vacant until the next general election.

The bill also would have barred the governor from making any interim appointments to the St. Louis County Election Board, but not any other gubernatorial-appointed election boards.

The provision had been sought by some county Republicans, including House Majority Leader John Diehl, who are still angry with Nixon over actions taken by the county election board, including last summer's removal of the GOP elections director, Joseph Goeke, a retired judge.

“By turning over the lieutenant governor’s constitutional duties to a vaguely defined staff member before allowing a political committee to choose a candidate behind closed doors, this bill would have created a confusing and untenable process for filling a vacancy in that office,” said Nixon in a statement, referring to a provision that allowed a staff member to perform the lieutenant governor’s duties if the office was vacant. “Especially during times of crisis – for example, if a vacancy is caused by a death or a crime – this poorly drafted bill would have created additional confusion and uncertainty.”

Environmental damages

Nixon also vetoed HB 650, a multi-faceted environmental bill that limited punitive damages to $2.5 million for injuries at mines operated and maintained by the Jefferson County-based Doe Run Co. Nixon said in a statement that “a bill that carves out a special exemption for a specific entity, at the expense of Missourians injured by lead poisoning, simply cannot become law.”

Education

The governor did end up signing SB 125, which allows St. Louis Public Schools to join the rest of the state in being able to dismiss teachers on the basis of incompetence. It also lets the state step in more quickly to take over districts that, like Kansas City, have lost accreditation

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