Court Mediation: Your Chance to Stop Foreclosure

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CONTENTS

1. Step 1. Send the Court an Answer
2. Step 2. Go to "Informational Session"
3. Step 3. Prepare and file your financial information
   
4. Step 4. Go to the mediation session
   • What to bring
   • Who will be at the mediation?
   • What happens at the mediation?
5. Step 5. Follow up to the mediation session
6. More Questions and Answers
   • Who is eligible for mediation?
   • What if the bank doesn’t want to mediate?
   • What if I get a loan modification from the bank before my court meetings?
   • What do I do if I can't get the bank's financial packet forms?
   • What do I do with the financial information I get from the bank’s lawyer?
   • Do I need a lawyer in order to mediate?
   • What if a bank person with authority doesn't come to the court meetings, or the bank doesn't follow through with agreements included in the Mediator's Report?
   • Am I required to participate in mediation?

If a sheriff has handed you a foreclosure complaint, you could be close to losing your home. But you can take action now that could change this. Just watch our introductory video, then follow the steps.

Step 1. Send the Court an Answer.

Just let the Court know that you want to keep your home - or explore options other than foreclosure. You must do this within 20 days after getting the court Complaint.

• Use this sample Answer form.
• Or use the Answer form that should have been delivered with the court Complaint.
• Or just send the court a note, saying that you want to keep your home.
• If you cannot send something in writing, call or go to the court right away to ask for help.

Note: Send a copy of your Answer to the bank’s lawyer. His name and address is on last page of the court Complaint.

IMPORTANT: Even if you are already working with your bank to work out a deal, you must respond right away to any court papers served by a sheriff. Again, simply send the court a note or use this sample form. At the very least call the Court before the 20 day deadline. Once the court is overseeing your talks with the bank, you should start getting answers more quickly.

The bank cannot get a court judgment against you or sell your home while you are involved in court mediation.

Step 2. Go to "Informational Session."

Notice to Portland, Bangor, Rockland and Ellsworth area homeowners: The court system is running a pilot program in the Portland, Bangor, Rockland and Ellsworth District Courts.  This means that your steps will be a little different. Your informational session and first mediation session will be scheduled for the same day. Bring all of your court documents and other relevant financial information.  An advocate may be there to help you with preparing your required "Defendant's Information." See below.

A few days or weeks after you “file” your Answer with the Court, the court clerk will send you a “Scheduling Order for Informational Session.” See sample Order form.

This notice will tell you the time, date and place of the “informational” meeting. Go to the meeting and be on time. If you do not go, you will probably be “defaulted.” This means that the Court will assume that you have dropped your request for mediation and will go ahead and allow your case to proceed toward foreclosure.

What to bring to the meeting:

• All of your court papers
• Financial forms included with the complaint (you do not need to compete these prior to the informational session)

At the meeting, you will be advised about next steps. Follow those instructions. Here is a preview of your next steps.

Step 3. Prepare and file your financial information.

Next you will get two forms from the Court. You may receive these at your “informational” meeting. Or you may get them in the mail soon after your meeting. These two forms are:

• Mediation Scheduling Notice (see sample).
• Foreclosure Mediation Information Provided by Defendant (see sample)

The “Scheduling Notice” sets the time, date and place of your next court meeting: the Mediation Session. It also orders you to fill out the second “Defendant’s Information” form - and “file” it with the court by a certain date.

Fill out the “Defendent Information” form.

You will see at line C. that you must attach some financial information.

The "financial forms or questionnaires" referred to in this Court form (line C) should have been attached to the court Complaint you received. If you lost the packet, call the bank’s lawyer to get another copy. If the Complaint did not include a financial packet, send a letter to the Court and the bank’s lawyer, telling them you did not get the financial packet.

If you need help preparing a financial packet, call the Foreclosure Prevention Hotline: 1-888-664-2569. They will try to connect you to a free housing counselor who can help you.

Generally, to complete the company's financial packet you will need to provide:

• a budget with information about your income and expenses (get sample budget form here)
• proof of income, such as copies of your two most recent pay stubs; Social Security or unemployment award letter; child support; profit and loss statement if self-employed (see help list here: Proof of Income Checklist)
• a copy of your most recent bank statements (if you have bank accounts). If you don’t have a bank account, write out a signed statement saying that you have none.
• a copy of your signed tax returns for the prior year
• a copy of your W-2 tax form

Your bank's packet may ask for more information, such as a statement of financial hardship. View sample hardship letter.

Review:

1. Complete the Defendant Information form and the bank's financial packet.
2. Make two copies of your documents.
3. Send the completed form and financial packet to the court.
4. Send a copy of the completed form and packet to the bank’s lawyer.
5. Keep the second copy for yourself.

Step 4. Go to the mediation session.

What to bring?

• All of your court papers
• Copies of your financial information. (See more details above). Bring updated documents with you to the mediation session, such as a new pay stub or bank statement or tax return.
• Any other documents that you think might be important.

Who will be at the mediation?

• The neutral mediator, who is trained and court-appointed
• You and any other co-owners; everyone who signed the loan must attend the mediation
• Your lawyer, if you have one
• A person from the bank who has the power to change the mortgage (may attend by telephone or video)
• The bank’s lawyer

You may also have a housing counselor, friend or relative who helped you fill out your financial packet. Or someone may be helping you to understand what is going on and to make decisions. You may ask the mediator to allow this person to sit with you at the mediation meeting. It would be helpful if this person can keep notes of what is discussed and decided at the meeting.

What happens at the mediation?

The mediator will address three issues.

First, the company claiming to own your mortgage has to show that it has the right to bring you to Court.

Second, the mediator will lay the financial groundwork. He will gather relevant facts, such as:

• the amount of money borrowed,
• the amount owed for interest,
• the reason you fell behind,
• the amount of the monthly payments,
• the interest rate,
• the value of the property
• any cost or fees for reinstating the mortgage
• your monthly income
• your monthly expenses

The mediator will then calculate how much you can afford to pay. This is based on the financial packet you submitted and financial information supplied by the bank. It will also factor in whether a loan modification is a good deal for the bank. This math work can help to clarify the overall financial picture. Learn more about "net present value" calculations.

Third, the mediator will help you and the mortgage holder explore what modification options might work, or whether there are other good alternatives to foreclosure.

Remember! Often a lender would rather work out a deal that keeps you paying, even at a lower rate. This could be a better deal for the company than foreclosing.

Step 5. Follow up to the mediation session.

Here are some examples of what may happen next:

1. The mediator advises that you should be eligible for a loan modification.
2. The mediator advises that you would not qualify for a modification but helps you explore other options.
3. Some other outcome, including the scheduling of a second session.
4. By the end of the session, you may have come to an agreement, or not.

Whatever happens, do not agree to anything unless you are sure of your position. Even if it seems that you may have an agreement, make clear that you have not agreed to “sign off” on mediation until after promised results are in place. Examples: Wait until your modification has become final. Or wait until the Plaintiff has completed steps he has promised to take, to your satisfaction. Ask the mediator to hold the mediation “open” until these things have happened.

Regardless of the outcome, the mediator will issue a written Mediation Report. Read what the mediator has written in the report before signing it. Make sure that it reflects what you discussed. If you are working with a housing counselor who could not attend the session, try to have good notes and go over everything with your counselor or a lawyer. If anything important is missing in the report, you can ask for changes. Submit your requests to the mediator in writing. Also, if there are more steps to be completed, this should not be the final report but an interim report – with the mediation still being held open.

You may need more than one mediation session. Again, make sure that you are satisfied with the results – and that all pieces of the plan are in place – before you agree that your mediation is complete and has been successful.

If you don’t have a lawyer, try to get help through the Foreclosure Prevention Hotline: 1-888-664-2569 – to answer your questions and “coach” you through the process.

More Questions and Answers

Who is eligible for court mediation?

Any homeowner can use the mediation program where:

• a court case has already been started,
• the property is residential,
• you lived in the home in the last six months,
• the home is your primary residence,
• the building has 4 or less units, and
• the foreclosure was filed after January 1, 2010.

What if the bank doesn’t want to mediate?

The bank doesn’t have a choice.

If you are eligible for the mediation program and you request it before the deadline, the bank must participate.

The bank must also make a good faith effort to reach a result that works for everyone. The law requires the mediator to hold both parties to this “good faith” standard.

What if I get a loan modification from the bank before my court meetings?

Be careful. We strongly advise that you continue through with the court meetings. Here's why:

First, the bank may not follow through on their own.

Second, the bank may later try to deny you a “permanent” modification, even if you have met all the requirements of a “temporary” modification.

Third, with the court’s oversight, you may get fairer results in the long run.

Fourth, the foreclosure case is not over until the Court dismisses the case.

So, again, don’t assume that the bank is going to follow through. If the bank is telling you that your out-of-court agreement will end the foreclosure, go to mediation anyway. At mediation, ask that the case be dismissed “with prejudice,” and make sure that all aspects of your agreement are in place and in writing. Get the terms of your agreement included in the mediator report.

What do I do if I can't get the bank's financial packet forms?

Again, the court will set a deadline for you to file the financial forms. If you cannot get them from your mortgage company before the deadline, then use the standard forms offered by the federal Making Home Affordable program. Get the forms and instructions you need here.

Attach these two forms, along with your proof of income documents, to your Defendants Report form. File all of thse documents with the court before the deadline. Explain, at line C.2. of the court form, why you are submitting alternative financial forms.

Send copies of everything, along with your completed court form, to the company's lawyer. Keep copies for yourself.

What do I do with the financial information I get from the bank’s lawyer?

The Mediation Scheduling Notice requires the Plaintiff to file different financial information, after you file yours. Here is the form that the Plaintiff is required to fill out and file. The bank’s lawyer should send you a copy of his responses when he files the original with the court.

If you want to understand this information better, before your mediation, try to get help from the Foreclosure Prevention Hotline: 1-888-664-2569.

Do I need a lawyer in order to mediate?

It is a good idea to have a lawyer – or a free certified housing counselor – to help you with the mediation. Contact the Foreclosure Prevention Hotline: 1-888-664-2569 to ask for help.

But if you cannot get legal help, you may want to bring a “coach” or support person with you. This person may be able to help you with taking notes.

Even if you have no one to help you, it is still worth trying to do on your own. Have a good handle on all of your financial details. Do your best to check and understand the numbers that the mediator is using to calculate a possible modification.

What if a bank person with authority doesn't come to the court meetings, or the bank doesn't follow through with agreements included in the Mediator's Report?

You can file a “Non-Compliance Report” with the Court. You can ask the court to fine the bank, or punish them in some way, for not following the rules.

Am I required to participate in mediation?

After mediation is scheduled, you may sign a waiver of mediation. This means that you won’t go through mediation. The court will only agree to this waiver if you:

• have good cause,
• are acting of your own free will, and
• have already been educated about the benefits of the program

Be careful not to agree to waive mediation without first talking to a lawyer about your options.

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REVIEW

1. Take one step at a time.
2. Ask for mediation right away after you are served with court papers; the deadline is 20 days.
3. Go to the informational meeting; take all of your court papers.
4. Put together your financial packet. Call the Foreclosure Prevention Hotline: 1-888-664-2569 if you need help.
5. Send your financial packet to the court, along with the court's reporting form. Send copies to the mortgage company’s lawyer.
6. Read all notices from the court carefully.
7. Don’t miss your court dates. If you do, you lose.
8. Be prepared.
9. Bring a housing counselor or other “coach” to your court sessions if you need support.

Find more information on the Maine Court website

You may want to take more steps to protect your rights. Learn more details about the foreclosure process on our page Home Foreclosures in Maine.

See our page Can I Save My Home? for more details about other "work out" options.

If you have questions or suggestions about the Foreclosure Diversion Program, contact: Manager of the Foreclosure Diversion Program at (207) 822-0706 or by email:  FDMP@courts.maine.gov

Updated August 2010; partially updated May 2013
PTLA # 672