In June of 2008, Supreme Court Justice Moyer challenged and encouraged all of Ohio’s courts with specialized foreclosure dockets to create foreclosure mediation programs. The Northeast Ohio Courts took action and started work on developing programs that would be beneficial to the parties, the Courts and the Counties. Cuyahoga County created a program that became nationally recognized as one of the most successful foreclosure mediation programs in the country. Subsequently, other Northeast Ohio county courts developed mediation programs to assist homeowners with loan modification and other

The Process

In counties where mediation is available, cases are typically scheduled first for a pre-mediation conference, followed by a full mediation. As the program has evolved, pre-mediation conferences are generally held by telephone. They are conducted to set guidelines and time frames for submitting documentation by homeowners and lenders. A standard financial package for a property owner will include proof of income, 60 days of bank statements, the two most recent tax returns, a financial worksheet (which varies depending upon the servicer or type of workout being sought), and a hardship letter. Additional documentation is often required and varies on a case by case basis. The mediation process typically takes between two to four months.

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.