Mediation as a means of dispute resolution is usually used when parties with a legal dispute want to avoid going to trial for one reason or another. Mediation can often be less expensive than going through a trial, and that is why it sometimes chosen by the parties. Mediation is available in the foreclosure process as it is in other legal proceedings.
Mediation in the foreclosure process is often started after the mortgage borrower has already defaulted on the mortgage and the mortgage lender has started the foreclosure process. During mediation, the parties come together with a neutral court-appointed third party who hears the facts of the case and tries to help the parties negotiate an outcome that avoids foreclosure.
In mediation, the mortgage lender may agree to modification of the mortgage terms or to the borrower participating in other loss mitigation programs, thereby allowing the mortgage borrower to catch up with the mortgage payments and not lose the house. If the borrower does not stay on schedule with the terms of the mediation, the foreclosure action can continue as before. Both parties must agree to mediation in the foreclosure process. At the height of the foreclosure crisis, mortgage lenders were required to inform borrowers of their mediation options within a certain period of time.
Even though mediation is less formal than trial, borrowers should not go through the process without seeking legal assistance or getting an attorney. Mortgage lenders are usually represented by attorneys, and a mortgage borrower may not be able to negotiate the best deal while representing him or herself instead of working with an experienced attorney.
Mediation can also sometimes be frustrating for the mortgage borrower because the mediator has often worked with the mortgage lender before, and it may feel as though the lender controls most of the mediation process.
Mediation and any of the modification programs offered through it are best if the borrower’s financial problems are temporary in nature, and the borrower will be able to keep up with the modified payments. Generally, a mortgage borrower agrees to mediation in order to find ways to avoid foreclosure and take advantage of loss mitigation offers from the mortgage lender. However, loss mitigation programs may be available without necessarily going through foreclosure or mediation.
If a borrower is going through some tough times, he or she can proactively approach the lender and ask about the programs and how to enroll in them. Mortgage lenders may not always agree to this, especially if the borrower is not yet behind on the payments, but if the lender agrees, the borrower could have a way to avoid foreclosure altogether.
Contact Us for More Information
If you are going through financial trouble and may be facing possible foreclosure, you need to discuss the issue with a knowledgeable foreclosure attorney. For more information on mediation, foreclosure modification, and to find out if you have a valid defense to foreclosure, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan. Our experienced attorneys can guide you through possible defenses and different alternatives to avoid foreclosure.
(image courtesy of Jan Jakub Nanista)