Foreclosure Fairness Act Mediation
Have you missed several mortgage payments and are struggling to find a solution with your bank?
Did you just get a foreclosure notice taped to your door? Does the notice say something about “mediation” on the 4th or 5th page but when you call the HUD number listed you aren’t getting anywhere?
Getting that first Notice of Default taped to your front door can be terrifying – but – don’t panic quite yet!
You may be eligible to attend foreclosure mediation under the Foreclosure Fairness Act (a law in Washington that allows eligible homeowners to attend foreclosure mediation against their bank).
Below are 5 reasons why mediation can be a helpful process if you’re struggling with your bank and facing foreclosure
- Once you file for mediation, the foreclosure activity on the property stops by law: The moment your mediation gets filed, the Trustee handling your foreclosure gets notified by the Department of Commerce that they are required to stop the foreclosure activity. (This is why it is so important to file for Mediation as soon as you receive your Notice of Default. Filing at this moment will prevent the bank from issuing the Notice of Trustee’s Sale (NOTS) until the Mediation process has run its course).
- Mediation gives you direct access to decision makers from your mortgage servicer that you normally wouldn’t get to speak to: Mediation requires an actual underwriter (a decision maker) AND their attorney to come to the negotiation table. These parties have more decision-making authority, flexibility in what they can offer you, and more knowledge about your options than the people you would normally speak to if negotiating directly with the bank.
- Your lender cannot get away with some of the things they do when they’re unregulated: The Foreclosure Fairness Act requires that ALL parties act in good faith. Things like ignoring you, lying, making conflicting statements, failing to move forward, requesting duplicate things multiple times happen less often (or not at all) during mediation because the lender knows they are being monitored and required to participate in good faith.
- Mediation provides an opportunity for unconventional solutions: It can be very hard to speak with banks about creative solutions to default problems. Lenders do a great job of blocking you from speaking with the actual underwriters (decision makers on the loan) so you often times do not have the ability to propose something outside the strict guidelines of the rigid loss mitigation options. Mediation allows for a more open conversation about creative solutions.
- Mediation allows you to start over if you submitted your application on your own and made mistakes: If you currently have a loss mitigation review going on that’s not going well for whatever reason, you can start over during mediation. I have helped numerous clients who presented their income incorrectly or made mistakes when they tried the process on their own get a fresh chance at the application process through mediation.
Mediation is not just limited to people trying to save their home – it is a process for an open conversation about ALL options
Mediation is not limited to those who just want to save their home. You can negotiate options to get out of the home, options for increased time in the home, and other types of settlements through mediation. Mediation is just a process through which you can have an open conversation with your bank. What you decide to ask for, try for and negotiate is up to you and your representative.
To be eligible for mediation:
- Your lender has to be one that is required to attend mediation. If your lender’s name is on this list, you cannot attend mediation.
- You have to file mediation during the correct eligibility window (see Timing of filing below)
- A housing counselor or attorney must file for mediation on your behalf. After that, you can represent yourself but that is not recommended.
Timing of Filing:
- You can file as soon as you get your Notice of Default.
- Your eligibility to file for mediation ends twenty days after your Notice of Trustee’s Sale (NOTS) has been filed.
- If you miss the twenty day deadline to file after receiving the NOTS you are no longer eligible for mediation.
How I Can Help You With Mediation
- Fully represent you against your lender for the duration of the process
- Advise on timing of filing, help you understand your eligibility, complete an immediate Mediation filing if have a filing deadline
- Create a tailored plan for you starting with your top choice to avoid foreclosure all the way through available back-up options
- Help you understand all possible options available to you, create out of the box solutions and help you buy additional time as needed to meet your goals
The most important thing I can do for you is to advocate.
Mediation is so much more than a process where you submit documents and hope for the best. I strongly recommend you get an attorney to help you – someone who understands your investor’s guidelines, the good faith requirements of the Foreclosure Fairness Act, and your servicer’s procedures to set you up for the best shot at success.
Frequently Asked Questions about Foreclosure Mediation
Should I use a Housing Counselor or an Attorney?
If you have the ability to hire an attorney, that is what I recommend you do.
If you have absolutely no money, then a housing counselor is an excellent option for you, as they do not charge any fees.
Housing counselors are well intentioned, and provide a valuable service. However, they are not attorneys, and are limited in what they can offer. Primarily, since they are not attorneys, they cannot give you legal advice or legal services. As a result, their ability to advocate on your behalf, and implement legal remedies will be limited
In general, they will provide competent document and submission support. They will have received 11.5 hours of HUD training, of which 2.30 hours are focused on foreclosure avoidance strategies.
Loss mitigation is a complex business and requires a deep understanding of investor guidelines, alternative resolution, and negotiation strategies. I have years of experience working with all major lenders with overwhelming success for my clients.
If you’re trying to figure out what’s best for you, I would recommend doing a consultation with both an attorney and a housing counselor to determine which is the best fit for you.
How much does mediation cost?
There is a one-time $300 fee paid to the Mediator for their initial service. If multiple mediation sessions are required – mediators are allowed to charge an additional $50 – $300 per session.
How long does mediation last?
This is very case, lender, and goal dependent so you should speak with an attorney who can review your situation and advise on the specific details of your case. I have been in mediations that last about two months (on the shorter side) and some have lasted over a year (on the longer side).
Why should I go through mediation instead of just working directly with the bank?
There are many reasons why mediation is better than direct negotiation but here are the five main reasons why you should always take advantage of your right to mediation:
- You are protected against foreclosure until you’ve exhausted all options – without mediation, the lender can move you toward foreclosure even if you’ve submitted an application for assistance.
- You will receive an increased amount of attention, communication and prioritization from your lender and their attorney.
- You get a third party (the mediator) monitoring the lender’s activities to ensure they act in good faith.
- You can explore more creative solutions with your bank than you could directly.
- You get to have an experienced advocate representing you to level the playing field to ensure you get reviewed for all possible options.
If you want to know if you’re eligible for mediation, discuss the option to attend or just figure out how mediation could be best used to achieve your goals, call me at (425) 654-1674.