Using Mediation to Pursue a Loan Modification in Your Foreclosure Case

When you received your foreclosure paperwork from a local process server, you may have noticed a form referring to the RMFM program, counseling, or mediation.  Mediations are a useful, if slightly misunderstood, tool when seeking resolution for your foreclosure case.

What is Mediation?

Mediation is an opportunity to sit down with your loan servicer and discuss ways to resolve your foreclosure suit.  At mediations, neither side is forced into an agreement.  Any information provided at mediation is confidential.  At the end of the mediation the mediator will issue a report outlining who attended the mediation and whether or not an agreement was reached.

How's it Different from Other Loan Modification Strategies?

In many ways, it doesn’t differ at all.  Around the office I often refer to mediations as “modifications in a day.”  To do a standard modification review, you must contact your bank, get the document list, send off documents, update as needed, etc.  It is not uncommon to spend 3-4 months submitting documents just to get a review underway (after that, the reviews themselves can take 1-3 months)!  Assuming you have everything submitted prior to mediation, a bank representative will be able to review your loan for a modification AT MEDIATION.

Who Attends Mediation?

Your personal attendance is required.  Your attorney would attend, as would the attorney representing you bank.  Your bank will have a representative who is supposed to have the authority to make decisions on your loan appear telephonically, and there will be a mediator present who serves as a neutral third party.  Prior to mediation, your lender and their attorneys will send out a document list that the bank requires to review your loan for modification.  They will request that those documents be submitted prior to mediation (usually 7 to 14 days prior).

Possible Outcomes

Assuming documents were submitted in a timely manner, I tell clients that mediations generally have one of three outcomes: your bank has approved you for a modification, your bank has denied you for a modification, or your bank needs additional documents before finishing a modification review.  The latter is the most frustrating option, but often if only one or two additional documents are needed you should be able to get a modification review underway shortly after mediation.

Modification Approved

If approved for a modification, you would not have to accept it at mediation- your bank will usually issue paperwork outlining the terms of the agreement, or require payment be made within 1-3 weeks.

Modification Denied

If denied, your bank will explain why you were issued a denial.  For example, if your bank denies you for a modification because you currently have more expenses than income, you could work on lowering your expenses.  If your bank gives you a reason for denial that cannot be adjusted, you will at least know that modification is not an option and work on pursuing a different resolution to your problem.

A Tool to Save Your Home

No matter the outcome, mediation is always a useful tool in helping you evaluate whether or not you can keep your home. It should be considered as a possible strategy for defending a foreclosure or preventing one in the first place.