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Government and court foreclosure mediation programs.

Many state and county governments have put into place foreclosure mediation programs. Several of the state laws and regulations that were created have been initiated by the local court systems. While these state laws and rules will vary widely, in general they establish some form of Foreclosure Mediation Program for those owner-occupied residential homes that receive a foreclosure notice.

The programs will ensure that lenders and homeowners have met to ensure all other options have been explored before the foreclosure filing can proceed. Below you will find information on the mediation process, as well as whether this is an option in your state or county. Find state and local mediation programs.

What is Foreclosure Mediation?

It ensures that communication occurs and that all solutions are explored. Foreclosure mediation is yet another resource that qualified homeowners can turn to if they are behind on paying their mortgage. It is offered to people who are facing a foreclosure. The mediation process can postpone or stop the foreclosure filing. The programs will ensure that families have access to assistance from attorneys, housing and mortgage counselors, and they also ensure that a neutral mediator is available at the homeowners disposal. Together these parties will do whatever they can to resolve a loan delinquency and save a home.

While the exact terms of each program will vary, all mediation programs have a goal of assisting homeowners, and helping them avoid a foreclosure. The participants, including lawyers, highly trained housing counselors, and mediators, will get in touch with the lender and propose work-outs, modifications, and payment arrangements. Any agreement reached will need to balance the interests of both the lenders, banks, and homeowners.

Some of the programs will have minimal fees, however most of them are free. Mediators are on call, and they are ready to encourage every participant in the process, as well as the mortgage lender, to reach and agree to a result that helps both the homeowner and lender.

What does a Foreclosure Mediation session involve?

While each program will be slightly different, in general they will work something like as follows. There will be a few different participants at the foreclosure mediation session, including an attorney who represents you (whose services will be free or very low cost), the professional mediator, a representative of the lender or bank, and the lender’s attorney. The mediation process itself is a give-and-take session in which all parties who are involved work together to try to come to a mutually acceptable resolution to the foreclosure problem.





The mediator will go over his or her role and they will involve all parties in discussions about what arrangements can be arrived at that will allow the homeowner to keep their home. Resolutions and agreements that are reached as a result of the foreclosure mediation process are compromises that will offer advantages to both the lenders as well as homeowners, as all parties must benefit from the process.

If the foreclosure mediation and negotiations are successful, a foreclosure mediation settlement memorandum will be prepared by the lawyers as well as the mediator and it will signed by all parties to ensure the agreement in put in writing. If there is an agreement, the parties will execute the appropriate documents. If there is no agreement, the parties will be free to pursue other legal remedies and options. Find additional questions, answers and resources on what foreclosure mediation involves.

What can result from the mediation process?

There are many different possible results from the process. As indicated above, all parties involved need to experience some type of benefit, but in general the solution comes down to what you can afford to pay on your mortgage, and it will be based upon what your income and expenses are. They will also look at the terms of your mortgage, what type of financial resources and assets you have, the amount you owe in arrearage and more. The fact is that every bank and lender has a slightly different loss mitigation program and different criteria as to what they will or won’t accept.

Also note that every mediation will not be successful. If the homeowner can’t show the ability to pay any reasonable amount, then your lender or bank will not have any incentive to do a workout or agree to new terms. So it is true that not every mediation will be successful. Some possible outcomes include any or all of the following:




Loan Modification: This is an agreement that will alter or change your current mortgage. Sometimes a modification can be permanent, and sometimes the modification can provide short term relief. Some of what a loan modification can do include reducing or eliminating fees, extending the number of years that you have to repay the mortgage, (such as converting a 30-year loan to a 40-year loan), lowering the interest rate on your mortgage, adding missed payments to the existing loan balance so you have more time to pay, converting an interest only or sub-prime 2-, 3- 5-, 7-year ARM loan into a fixed rate loan, and more.

Repayment Plan: This is an agreement that you will need to enter into in which you will agree to resume making your regular monthly mortgage payments, plus a portion of the past due payments each and every month until you are caught up with the loan. So the missed payments are added to your existing mortgage.

Loan Reinstatement: This is a solution in which the mediator and your lender will agree that all the amounts that you own on the loan and that are required to bring your loan current (including attorney fees, insurance, late fees, unpaid property taxes, etc.) can be paid. The lender will agree that once these outstanding fees, charges, and loan amounts are paid, the foreclosure filing will be dismissed and you will be back on your regular payment plan and your loan will become current.

Mortgage Forbearance Agreement: This solution may result from the mediation process, and it will allow borrowers to repay a mortgage loan delinquency over time. The end results of a mortgage forbearance program may include one or more of the following.

  • A suspension of the monthly payments for a period of time.
  • A reduction of the monthly payments.
  • Allow any late fees or foreclosure expenses that are accrued prior to the execution of the forbearance agreement to be included as part of the loan repayment schedule.
  • Create a period of time in which the borrower needs to make only the regular payments, and any fees or charges are postponed.

Once the forbearance agreement ends and any delinquent amount is paid in full, the normal payment amount resumes and the loan is fully reinstated. Click here to read more on forbearance.

Short Sale: This is when you sell your home for less than what you owe on the mortgage loan. A result of the mediation process is that the bank or lender may agree to allow you to sell your home at a loss because a short sale is preferable to a foreclosure for both the lender and the homeowner. The reason this also benefits the lender is that a foreclosure exposes lenders to potential substantial loss for carrying costs,  litigation costs, real estate/property taxes and home insurance, and other expenses. Also, a short sale may be beneficial to the borrower when a lender agrees to relieve the homeowner of any liability for any deficiency or issues with the home. Learn more short sale.

Loan Guarantee Partial Claim: This is when you receive an interest free loan. If your mortgage is insured, your lender might help you with providing or accepting a one-time interest-free loan from your mortgage guarantor to bring your account current. In addition, possibly best of all, you may be allowed to wait several years before repaying this interest free loan. So the loan helps you bring your mortgage current and get back on your feet.

Time to Refinance: A result of a foreclosure mediation is that the mediator, bank and/or lender may delay the foreclosure proceedings. This is usually only an option if you have a reasonable prospect of arranging to refinance the loan, but you just need more time to make this happen.





Extension Agreement: This is an agreement that the homeowner and lender enter into in which you pay a portion of the amount of your mortgage delinquency. After this occurs, the remaining portion of the delinquent amount and any fees is added on the end of your home loan, so therefore buying you time to repay missed payments.

What states and counties have foreclosure mediation programs?












New Hampshire





New Mexico

New York

New Jersey

North Carolina




Rhode Island:

Washington state

Washington DC



An increasing number of local and state governments as well as court systems are starting foreclosure mediation programs. If you have access to one, be sure to explore this option.


By Jon McNamara


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