Mediation in MD Foreclosure - What Homeowners Should Know and Do?

Prior to 2010, homeowners in Maryland had limited opportunities to be heard by the court and their lend-ers about their financial situations. Also, they had limited knowledge of the options available to them to save their homes. They just didn’t understand the foreclosure process, the timelines and its effect. In July, 2010, that changed with the passage of a new law that ushered in mediation into the Maryland foreclosure process. It can truly be said that for the first time, homeowners were given a “seat at the table”, the opportunity to “meet and talk” with their lenders and the trustees/attorneys handling the foreclosures of their homes. The addition of mediation to the foreclosure process raises important questions that should be on every homeowner’s mind - why is foreclosure mediation important, what does it entail, and what should a homeowner in foreclosure do to participate in mediation?

Again, this is an important process, because it allows the homeowner to hAgain, this is an important process, because it allows the homeowner to have a voice in the foreclosure of their home. Prior to 2010, the options for homeowners were limited to filing bankruptcy or an exception to the foreclosure sale, which dealt mainly with procedural defects of the sale itself. With mediation, an opportunity for dialogue was created. Filing for bankruptcy protection became less of an immediate option for resolution.

What does it entail? The mediation is a non-adversarial process, that is, the parties, (lenders, trustees/attornattorneys and homeowners), are given the opportunity of communicating and possibly, working together co-operatively to reach the best resolution for everyone. The mediation is headed by an administrative judge from the Office of Administrative Hearing (OAH). The mediator, an impartial person in the process, takes time to educate the homeowner of the different options, mainly, retention options (keep your home) through the different private and government programs, (loan modification, payment deferral and reprepayment plan), or liquidation options (sale of your home), through short sale, deed in lieu, and/or cash for keys. The mediation process requires that a representative of the lender be available in person or by phone. The lender, having reviewed the homeowner’s file, is able to determine what options are available and what documents are required for each program, (such as paystubs, and hardship letter, etc.), and communicate this directly to the homeowner. Also, any payment disputes can be addressed.

Given how important the mediation is, a homeowner in foreclosure must take the following steps to par-ticipate in it:

1. Read every mail you receive from your lender and foreclosure attorney. The mail can be overwhelming! I understand that. However, a package titled “Request for Foreclosure Mediation” form, and envelopes pre-addressed to the Clerk of the Court and the attorney handling the foreclosure will come in the mail.

2. Promptly request mediation 2. Promptly request mediation by completing the form and mail it using the envelopes provided within 25 days of receiving the package. Include a $50 check or request a fee waiver. Do not delay. Failure to timely request mediation may result in the lender asking the court to reject the mediation request filed after the 25 days have lapsed. When requested promptly, a notice of the date, time and venue of mediation will be mailed to mediation will be mailed to you. The mediation will be held within 60 days of the receipt of your request in a courthouse or venue within your county (or where the property is located). Again, you must read your mail to ensure you don’t miss the date. You are entitled to have representation (attorney) with you. For moral support, you could go with a trusted friend, family member, or housing counselor.

3. Be sure to attend the mediation on the scheduled date. If you are sick, unable to attend due to conflict or running late call the number on the notice conflict or running late call the number on the notice you received. After 30 minutes of not appearing, the mediator will report a “failure to appear”. Failure to attend mediation will result in the loss of the opportu-nity to dialogue with your lender and figure out realistically what your options are.

One thing I have seen over and over from mediation is that the homeowners leave the venue with a candid realization of their situation. Some are able to understand why they can’t keep their homes and come to terms with it. Some are energized to work harder to meet the requirements of their lenders to qualify for one of the programs. For others, it is therapeutic, they have been able to talk in a nonjudgmental, and non-confrontational environment lead by a seasoned administrative judge. Every con-versation is strictly confidential and cannot be used in the foreclosure or any judicial proceedings. None of the parties can be made to testify about the process. If an agreement is reached at the mediation, there is usually a hold on the foreclosure. If the approved retention program is successfully completed, a home is saved! On the other hand, if liquidation is agreed upon, the homeowner is able to move on without foreclosure. So, why not mediate?