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The bank or lender that is filing the foreclosure needs to pay the District of Columbia $300 for each notice of default they issue. However, if the foreclosure proceeds and eventually a sale of the home takes place and - after paying off the lender and all associated legal and auction fees - there is any surplus left for the borrower, the $300 needs to be returned to the lender.
The District's Department of Insurance, Securities and Banking (DISB) will be the government agency that appoints a mediation administrator to oversee the process, and this government agency has also been authorized to implement, monitor and enforce the law throughout the region.
After notice is received
Once the Washington DC homeowner receives the notice, two scenarios can take place. If either of the options below do not work for you, contact the Fannie Mae Washington DC mortgage help center for free advice.
In the first scenarios, the homeowner can decide to do nothing, and in that case the right to mediation is waived. In addition, the administrator is required to issue a mediation certificate no more than 60 days after the initial notice of default was sent to the borrower.
After that, once the certificate has been issued, the lender or bank is then free to foreclose on the home by taking the second step: in the process, which is then sending a notice of foreclosure sale and waiting the required 30 days for it to take effect.
If a homeowner wants to further explore their options and pursue the Washington DC foreclosure mediation program, that borrower must pay a mandatory $50 fee and send it with a mediation-election form to DISB within 30 days of receiving the first notice of default. At that time the homeowner must also send the loss-mitigation application to the lender.
District's Department of Insurance, Securities and Banking is then required to schedule mediation within 45 days from the date the lender mailed the default notice. The actual foreclosure mediation session will then be conducted by a neutral third party trained in foreclosure mediation and that will provide the homeowner with solutions to their mortgage difficulties. To assist the mediator along in the process, the lender is required to produce a loss-mitigation analysis. They need to show options and other solutions that are short of foreclosure that might be available to the homeowner. Options may include a loan modification, reducing interest rates, government mortgage assistance programs, and forbearance. Learn more on obtaining help with your mortgage from the mediation sessions.
The mediation session will occur, and if mediation ends up with the lender and homeowner agreeing that foreclosure is the only option, the mediator will report back to DISB. The department will then review the case, and if the department is satisfied that the rules have been met, a mediation certificate will be issued, and the lender will be free to start the foreclosure process and to take away or auction off the home.
On the plus side, if another solution is agreed upon that can provide the homeowner with mortgage relief, the department will continue to monitor the process and the agreement that was put into place to make sure that the settlement is honored. If the agreement is not followed, a bank or lender can be fined $1,000 for failure to implement the terms of the foreclosure mediation agreement with the borrower.
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