History of Foreclosure Mediation
In Ohio
March 2007 – Creation of Governor’s Foreclosure
Prevention Task Force
September 2007 – Task Force Report (seven
themes; 27 recommendations)
December 2007 – Chief Justice Thomas J. Moyer
proposes that courts manage the increasing
number of foreclosure cases filed in Ohio by
developing foreclosure mediation programs.
Theme:
Improve Ohio’s Foreclosure Process
Recommendation: Encourage mediation and alternative dispute resolution to maximize the early resolution of foreclosure
History…
February 2008 – Supreme Court launches the
Foreclosure Mediation Program Model, the first of its
kind in the nation, designed for counties to modify
based on their local needs, resources, community
and stakeholders. The result – programs vary by
county.
2008- present – The Supreme Court Dispute
Resolution Section continues to work with local
courts to create and enhance mediation programs.
The Supreme Court is also working with other states
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Major Reasons for Foreclosure
Then - subprime loans
Now
Loss of income
Employment
Two income household becomes one
Decrease in the number of hours (full to part-time)
Foreclosure Mediation
Process and Procedure
Ohio Revised Code (O.R.C.) Chapter 2710
Uniform Mediation Act (UMA)
Supreme Court of Ohio Rules of
Superintendence for the Courts of Ohio Rule
16. Mediation
Local Court Rule
Standing Order
Court Order
Local Court Policy and Procedure
Foreclosure Mediation
Program Funding
Filing fees
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Mediation Process
Core Values
1.
Confidentiality (to the extent the parties agree
per the Uniform Mediation Act)
2.
Party self-determination
3.
Mediator neutrality
Mediation: The Basics
“Mediation” means any process in which a mediator
facilitates communication and negotiation between
parties to assist them in reaching a voluntary
agreement regarding their dispute.
“Mediation communication”
“Mediator”
See O.R.C. 2710.01. Uniform Mediation Act. Definitions.
Uniform Mediation Act (UMA)
Privilege and Confidentiality
Privilege O.R.C. 2710.03
Privilege against disclosure
Confidentiality O.R.C. 2710.07
Mediation communications are confidential to the extent agreed by the parties
Mediation Key Points
Goal
: mutually acceptable agreement that is
commercially reasonable and sustainable
Impartial
– see O.R.C. 2710.08 (G).
Appearance of impartiality/neutrality
Facilitative Style of Mediation
Mediators guide the parties through a party
self-determination process.
Mediators provide resource information.
Mediation Key Points
The Role of the Mediator
Facilitative Style of Mediation
Mediators guide the parties through a party self-determination process.
Mediators provide resource information.
Mediation Key Points
Success means
… a commercially reasonable
and sustainable agreement has been reached.
Includes keeping people in their home as well as
transition strategies when is not possible.
Some foreclosure cases need to be resolved through
litigation.
To date some counties are reporting that 62-77% of
Mediation Key Points
Preparation
Information exchange BEFORE the mediation session
is important in order to reach an agreement.
If parties are prepared by having shared necessary
information/documents before the mediation, many cases can be resolved with one session, which results in the most efficient use and allocation of state and local resources.
Best practice – send servicer/lender accurate and
Mediation Key Points
Preparation continued…
Documents that will most likely be requested:
Questionnaire/forms providing basic information from both parties
Financial information worksheets including income and expenses may also include but are not limited to:
Hardship letter, pay stubs, bank statements, tax return, 4506-T form
Best practice – authorize servicer/lender to pull homeowner credit
Mediation Key Points
The
rules of civil procedure
are the same as anyother civil case.
HUD Certified Housing Counseling
Organizations provide counselors that assist borrowers with their overall budget, homeowner education, completion of necessary documents and forms.
Pre-mediation conference call
Necessary information and confirmation of attendance
Agreement to Mediate
Detail extent of confidentiality – sample on the Dispute Resolution Section Web site. Include 2nd mortgage
Mediation Key Points
Termination
The mediator may terminate the mediation. For example, if the defendant is pro se and does not appear to understand the agreement, the mediator may give him/her resources for assistance and
reschedule the mediation so the goal of the mediation is achieved.
Balance
Mediation Key Points
Timing
It is recommended that foreclosure cases are scheduled for
mediation as soon as possible. As the case proceeds it becomes more difficult to negotiate.
Cases have been mediated after default judgment, sheriff’s
Mediation Key Points
Participation
Foreclosure mediations can take place where the borrower is present and the lender/servicer who has authority to settle participates by phone and/or has local counsel present in the mediation while they are present via the telephone. This mitigates costs incurred by
lender/servicers that are commonly charged to the
borrower. It also benefits all parties and does not hinder the probability of success when the lender/servicer
Mediation Key Points
Necessity to Memorialize Agreements
Oral agreements are extremely difficult to enforce since
mediation communications are privileged under the Uniform Mediation.
One of the exceptions to the privilege includes agreements
signed by the parties.
See Foreclosure Mediation Summary Report on the
Supreme Court’s Web site at:
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What To Expect During the
Mediation Process
1. Introduction
2. Parties inherent desire to shorten the process
3. Discussion of the value of an agreement to mediate
4. Description of the problem
5. Time to allow parties to tell their story
6. Management of emotions
7. Summarizing where necessary
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Alternatives
1.
Seek to retain the home
2.
Seek to relinquish (transition strategy) the
home
without residual liability
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Alternatives Summary
Retention Repayment/Reinstatement Forbearance Loan modification Temporary rate reduction
Temporary payment reduction Bankruptcy - Chapter 13,
sometimes 7
Refinancing Short Payoff
Short sale
Deed in lieu of foreclosure Cash for keys clause
Consent judgment (also called in
rem foreclosure)
Cash for keys clause Chapter 7 or 13
Relinquishment/Transition
Training
Basic Mediation - minimum of 12 hours
Foreclosure Mediation - offered by the
Supreme Court – minimum of 4.5 hours
Uniform Mediation Act – minimum of 2
hours
The Supreme Court has trained more than
1000 individuals in Foreclosure Mediation
including Michigan, Wisconsin, Kentucky,
Illinois, and Indiana.
Ongoing Professional Development
Roundtables (both virtual and face-to-face) are
scheduled regularly to share best practices.
See Supreme Court of Ohio Dispute Resolution
Section Events Calendar for details at:
Awareness - Marketing
Foreclosure program process and procedures
vary by county, but the goal is the same.
See “Ohio Foreclosure Mediation Contact
Information by County” on the Supreme Court of
Ohio Dispute Resolution Section Web site.
Save the Dream hotline, Save Our Homes
task forces, language in the summons, post
cards, flyers, brochures, word of mouth,
Message to Homeowners
Open your mail.
Contact your mortgage lender/servicer as soon
as you receive notice from the court or when
you realize you will have trouble making your
payments.
Work with a HUD Certified Housing Counseling
Organization.
Don’t wait
Do NOT move out.
Beware of scams.
Need help? Ohio’s Save the Dream resources:
Foreclosure Mediation in Ohio
Supreme Court Resources
In addition to resources cited and discussed throughout
the training, go to the Dispute Resolution Section’s
Web site at
www.supremecourt.ohio.gov/foreclosure
for additional resources such as:
1. Court-connected Foreclosure Mediation Contact
Information To request mediation, individuals must
contact the local court where the foreclosure action
was filed. For contact information, click on “
Ohio
Supreme Court Resources
2. Mediators For a list of mediators who have
completed the Supreme Court recommended
training click on “
Directory of Foreclosure
Mediators
”
3. Housing Counselors For contact information,
click on
“
Ohio Housing Counselor Contact
Information by County”
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If you have questions or comments,
or want to share best practices about your
program, please contact:
Jacqueline C. Hagerott
Manager, Dispute Resolution Section The Supreme Court of Ohio
