Foreclosure Mediation

History

The Cuyahoga County Foreclosure Mediation Program was started in June of 2008. In the year leading up to the program’s announcement, Supreme Court Justice Moyer challenged and encouraged all of Ohio’s courts with specialized foreclosure dockets to create foreclosure mediation programs. The Cuyahoga County Court took immediate action and started work on developing a program that would be beneficial to the parties, the Court and the County. The Court created a program that has become nationally recognized as one of the most successful foreclosure mediation programs in the country. Subsequently, other Northeast Ohio county courts developed mediation programs.

The Process

In Cuyahoga County, after referral into the Program, a case is scheduled for a pre-mediation conference, followed by a full mediation. At the pre-mediation conference, counsel for any party with affirmative claims must appear, along with the property owner or his/her counsel. This meeting is held to set guidelines and time frames for submission of documentation by both parties. A standard financial package for a property owner will include proof of income, 60 days of bank statements, the two most recent tax returns, 4506-T (request for tax return transcript), a financial worksheet (which varies depending upon the servicer or type of workout being sought), and a hardship letter. More documentation is usually necessary, but varies in each individual case. The full mediation typically takes place about 30 to 40 days after the pre-mediation conference.

The structure of foreclosure mediation does not follow the model of give-and-take negotiation that mediation is commonly understood to be. The objective of foreclosure mediation is to ensure the bank properly reviews all loss mitigation options before completing the foreclosure process. This is done primarily by staying foreclosure cases while they are in mediation. In most cases, foreclosure mediation is not a forum to negotiate what a property owner believes his or her monthly mortgage payment or loan balance should be. An underwater property is an unfortunate component to almost every residential foreclosure. Some property owners are bewildered when a principal reduction is not offered. Settlement options available focus on offering the property owner an affordable monthly payment. This is commonly achieved by extending the loan’s term or by reducing the loan’s interest rate. There are other mediation solutions besides loan modification.

For a list of possible mediation outcomes, click here.

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