Learn more on the foreclosure mediation process.
Below you will find many of the common questions and answers on the foreclosure mediation process. Find many of the pros, cons, and benefits to the mediation process. This will help ensure a favorable outcome.
Many ask, what is the benefit to mediating my mortgage problem?
The process involves a neutral individual, who is the mediator, and this person will work with the homeowner and lender to find a solution to the foreclosure problem. The process may or may not involve an attorney, and the goal is to resolve the mortgage problem by mutual agreement between all parties. Ideally the end result is the borrower keeping their home.
Foreclosure mediation provides a forum for the homeowner and lender to determine if an agreement can be arrived at that is reasonable and beneficial to all parties involved. It is trying to find a compromise. Studies and data show that many mortgage problems can be resolved through good communication and negotiation. It is also shown to be true that lenders, banks and mortgage servicers are and have been willing to discuss flexible solutions to the foreclosure crisis plaguing the nation. Many lenders even have their own programs, such as Bank of America foreclosure programs. Foreclosure mediation provides a more informal environment, rather than the court, in which the parties can have a discussion that, without a mediator, might be much more difficult and tense.
Some of the additional benefits of mediation include both cost and time savings. As we all know, litigation can be expensive, take a long time, and it is stressful. All of this is true for both the lender and homeowners. So one of the major pros of foreclosure mediation is that it allows all parties to create agreements that include terms and conditions that may not be able to occur and would be restricted by legal remedies. So while the process can save time and money, in order for this to happen and for the mediation process to be cost-effective and productive, all parties must actively participate in the process.
When does foreclosure mediation occur?
It needs to occur fairly early in the process. A foreclosure filing can be mediated before it is filed in the local court system. It can usually occur up to the point of the confirmation of the sale of the home. Even after a foreclosure case has gone to the sheriff sale it can be mediated, however it is much more difficult. It is much more difficult, but still possible, to mediate a case in which the judgment has already been rendered in favor of the bank or lender. However the point is, start the process early as the longer you wait, the less chance for success. Do not wait.
Who needs to participate in mediation?
The homeowner (or borrower), the mediator/negotiator, and any support person(s) that the homeowners wishes to bring. That can include their own attorney or someone else to support them. In addition, the bank or lender(s) needs to attend, and their attorney or agent will also need participate in the foreclosure mediation program. In addition, it is very important that the borrower provides their personal and financial information to lender or mortgage servicer in advance of the foreclosure mediation program. This needs top occur in order to ensure the lender and/or the mortgage servicer has the settlement authority at the mediation process and that a decision can be arrived at. Some of the results may include a mortgage modification, forbearance, or even principal reduction.
How long does it take and what do I bring?
The session is not that long. Most foreclosure mediations will take between one and two hours. However, this is only true if people come prepared, and if documentation was reviewed before the meeting. You need to come prepared, and be open and honest throughout the session.
What to bring.
Most of the prep work needs to be done before the mediation session starts in order to reap all the benefits. For most programs you will need to provide 1) the last two months of bank statements and other financial records, 2) your two most recent pay stubs, 3) any type of questionnaire, applications, and other financial worksheets that may have been provided to you by the mediation department or the lender/servicer, 4) property tax records 5) the payment history of your current loan. before you attend the session, you definitely need to check with your mediator to make sure that you have the provided all the proper documentation that is necessary for the lender/servicer to fully assess your situation. Also, confirm with them what else you may need to bring. The key to success is preparation, and the fact is that if a commercially reasonable and sustainable agreement can be met that benefits all parties is usually decided before the mediation session itself. The mediation session itself is usually more just working out the final details.
How can the mediation process be successful?
Many benefits and solutions can result from a mediation program. While each state program will vary, in general a successful foreclosure mediation will involve all parties reaching an agreement that benefits all parties, and is a win-win for all involved. Some of the positive results may include a loan modification, or some banks will put the borrow into one of their assistance programs. For example, learn more on Wells Fargo mortgage assistance programs.
Sometimes the definition of success may not even mean the homeowner keeping their home, as in some cases the homeowner is just too far behind on their payments or their financial condition is too poor. However, a pro of mediation in this example is the mediation may create a transition period for the family in the home, and maybe provide them with other support or resources to help pay for a move, or provide for the first months rent in a new home.
Is a mediator an attorney?
Not necessarily. The mediator needs to be well trained in the process, and they need to guide the various parties through a the process in which the goal is to assist them in reaching a mutually acceptable agreement to resolve the foreclosure and come up with some type of solution. Remember that the mediator is a neutral third party and is not an advocate for either party. So while they do not need to be attorneys, they do need to have credentials and be trained in the process.
Ways to start foreclosure mediation
Most states either currently offer mediation services, have them in a pilot mode, or are in the process of rolling out programs. The reason being is that they have shown success in helping some homeowners keep their homes, and foreclosure mediation can be another tool in the process.
Most non-profit HUD agencies have well trained staff on site that can help facilitate the process. Click here to find a listing of counselors in your state. Ask the counselor if they can provide you with information on foreclosure mediation in your state.