Prior to 2011, when a lender wanted to foreclose on a home, they were required to enter mediation proceedings with the borrower. Although there is no such requirement today, mediation can still benefit many homeowners and could even help them remain in their home. So, what is mediation, and why would a homeowner enter into it when facing foreclosure?
The basics of mediation in Florida foreclosure proceedings are below. If you’re in fear of losing your home, a foreclosure defense attorney can review your case and determine if mediation is a suitable option.
What Is Mediation?
When many people hear the term “mediation,” they often think of civil cases, such as divorce proceedings. However, foreclosures are also civil cases and in many cities and counties throughout the state, mediation is an option for these cases as well.
Foreclosure mediation provides an opportunity for the lender and the borrower to meet. They will do this with a mediator, who is a neutral third party. The intent is for the two sides to each present their arguments and come to an agreement that could stop the foreclosure proceeding. This typically means renegotiating the mortgage terms so they are more acceptable to the lender, while still being more affordable for the borrower.
Mediation is often entered into when the lender has already denied an application for a loan modification or a short sale. This, however, isn’t the only time mediation proceedings can begin in a foreclosure case.
Benefits of Mediation
Mediation holds benefits for all parties involved. For the borrower, it’s a chance to obtain terms that would benefit them and allow them to keep their home, such as modifying the loan agreement. Avoiding foreclosure is a benefit for the lender too, as foreclosures are expensive and costly. Lenders would typically prefer to simply continue getting mortgage payments from the current borrower.
Many borrowers also feel more comfortable entering into mediation than simply trying to work it out with the lender on their own. Lenders are intimidating, particularly when you’re a borrower who has defaulted on their loan. Having a mediator there cannot only facilitate negotiations but also put everyone at ease. A mediator encourages respectful and honest communication and will maintain this goal throughout the proceedings.
Sometimes, mediation is beneficial simply because it forces the lender to put all their cards on the table. Entering into foreclosure proceedings is scary for most people. They’ve never been there before and they don’t know what to expect. However, during mediation borrowers can begin to understand the position of the lender before a judge makes a final decision. Simply knowing what to expect can also help calm the anxieties of many homeowners.
During mediation, the lender may also produce documents or other information to support their argument. These documents, though, are not always accurate. For example, a lender may not have the note necessary to follow through with foreclosure. This can stop the foreclosure proceedings altogether, and provide reassurance to the borrower that they’ll be able to stay in their home.
Lastly, all foreclosure proceedings stop when mediation is started. This can provide more time, which is sometimes all homeowners are looking for when facing foreclosure.
The Steps in Florida Foreclosure Mediation
When going through foreclosure mediation, there are five basic steps that will occur. These include:
- Opening remarks: The mediator will open the mediation sessions by setting the ground rules and defining the purpose of the mediation meetings. They will likely state that the hope is to come to an agreement on the foreclosure proceedings.
- Identifying the problem: The mediator will then state the problem. It’s likely that the lender has defaulted on payments, and that the lender is trying to recover the debt.
- Exchange of information: There is often a lot of information exchanged during mediation meetings. Borrowers will often present financial documents that substantiate their claims that they cannot pay their mortgage payments as they are. Lenders will typically present documents such as a home’s note and proof of any defaulted payments.
- Negotiations: Once all of the information is exchanged, the two parties will enter into negotiations. The borrower may give their reasons for requiring a loan modification, while lenders may present arguments for denying a loan modification.
- The conclusion: Once mediation is finished, the lender and borrower may come to a conclusion, or they may decide to enter litigation. If the parties were able to come to an agreement, it will be drafted and signed by both parties. If the parties cannot come to an agreement, the lender will have to file a foreclosure lawsuit with the courts.
Although the mediation process sounds straightforward, it can become complicated. When entering into mediation, it’s best to speak to a foreclosure defense attorney first.
When to Enter Into Mediation
Mediation is a great tool for homeowners scared of losing their home. However, it still takes time and the lender must agree to it. Just like with all other aspects of foreclosure, once a decision is made to enter into mediation, it should be done as soon as possible. The more time a foreclosure defense attorney has to prepare the case, the better chance of success borrowers will have during mediation meetings.
Additionally, there may come a time in foreclosure proceedings that it is too late to proceed with mediation. Entering into mediation quickly can also help protect the home, and give borrowers the best chance of stopping or delaying the foreclosure.
Want to Learn More About Mediation? Call Our Florida Foreclosure Defense Lawyers
Facing foreclosure is a homeowner’s worst nightmare. There are alternatives however, that could help. Mediation is just one of these. If you’ve defaulted on mortgage payments and think you may lose your home, call our Fort Lauderdale foreclosure defense attorneys.
At Loan Lawyers, we know there are many options that will keep homeowners in their home, and we want to help determine which one is right for you. Call us today at (954) 523-HELP (4357) or contact us online for your free consultation to learn more about how we can help.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.