Seeking to give struggling homeowners some relief, Cook County commissioners are committing $3 million to create a foreclosure mediation program.

The program provides a way for homeowners and lenders to meet face-to-face and sort out their options with the help of county-provided counselors.

It’s similar to programs that have cropped up in places like Philadelphia and New York State. Proponents say it’s a vital lifeline to homeowners who otherwise would abandon their homes or fall further into debt.

But skeptics say such programs simply delay the inevitable.

“You can counsel them all you want, but there’s no solution to their problem,” says Commissioner Tony Peraica, the lone nay vote on the issue’s inclusion in the budget.

But supporters like Braden Listmann, a field director for Action Now, a community organization that works with residents on the South and West sides, say the program will have just the opposite effect. He says it will not only help people out of foreclosure, but educate them on how to deal with problems that surround foreclosure.

Chief among obstacles for homeowners served with foreclosure notices, he says, is that many don’t realize the notice is also a court summons.

“A lot of people think that’s it, they’ve lost their house, and they won’t show up to the court date,” Listmann says. “They’ll just make plans to move out.”

The money will fund a three-pronged program, introduced by Commissioners Larry Suffredin and Forrest Claypool and advocated by the Chief Judge Timothy Evans, incorporating door-to-door outreach, mediation and loan counseling.

Under the program, the county would retain lawyers familiar with foreclosure practices. Whether they are paid or not is up in the air. When homeowners are issued a foreclosure notice, they are given the court summons with information on how to meet face-to-face with their lender. At this point, lawyers and lenders will work to devise a solution for homeowners.

Forcing lenders to meet with homeowners could go a long way in mitigating the housing crisis in the county, says Commissioner Bridget Gainer.

“The incentive has to be that the lenders know they’re not going to get an easy order in foreclosure,” she says.

According RealtyTrac, a Web site that tracks foreclosures, there have been 156,218 new foreclosure filings in Illinois in 2009, including 9,130 in Cook County in November, a 134 percent jump from a year ago.

Such programs are good not only for people who face losing their homes, but also for lenders, who often lose huge chunks of change when their properties going into foreclosure, says Dennis Bordyn, a attorney in Kane County’s Maple Park who specializes in loan modification and foreclosure defense.

“The lenders lose substantially more money in a foreclosure than in any other situation,” he says. “It would be a different story if the lenders made out on foreclosures … But it’s also in the lenders’ best interest that they can avoid as many foreclosures as possible, in which they would take a far great loss than the alternatives to foreclosure.”

Lenders lose an average of 40 percent when homes go into foreclosure, he says, often because vacant homes are stripped of valuables, like copper wiring, damage that occurs because of winter weather and vandals. It’s even worse when a home is among several in a neighborhood in foreclosure.

“One of the problems in Chicago and other poor neighborhoods is once a house goes into foreclosure and the homeowner gives up, frequently they walk away from the house,” Bordyn says.

As the country continues to grapple with the effects of an economic meltdown and a lending crisis precipitated by bad loans, the Obama administration has also stepped forward to offer some relief. In November, the administration moved to speed up plans to allow homeowners to modify their loans by up to 31 percent.

In Cook County, a $28 million U.S. Department of Housing and Urban Development grant has been helping areas that have been or are likely to be affected by foreclosures and abandonments.

Still, helping hands like these and the county’s program are short-term fixes, says Matthew Weisberg, a Philadelphia attorney who used to represent lenders in foreclosure cases and now works with consumers on similar cases. He calls it nothing more than a “stopgap.”

Philadelphia was the first city in the nation to enact a foreclosure mediation program.

Part of the problem he sees in Philadelphia is banks sending attorneys who have no authority to mediation sessions. So when homeowners think a deal has been made, higher-ups need to sign off on it, further complicating the process.

“That’s classic banks. It’s form over substance,” he says. “It’s arguably what has caused the entire financial problem. The right hand doesn’t know what the left hand’s doing, and no one’s looking to the future.”

Weisberg says lenders are easy to blame, but homeowners who default on their mortgages should also be held accountable.

“My perception is that it does not work,” Weisberg says. “It depends what you call working. If you think getting someone an extra four months in their house is working … then it works.”