Court Mediation: Your Chance to Stop a Foreclosure

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.

Follow the 4 steps below. Also review the most common Mediation Questions & Answers.

Steps to Stop Foreclosure:

Frequent Questions

Video overview

Step 1. Send the Court an Answer and Request for Mediation.

This step is essential in letting 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, whose name and address is on last page of the court Complaint.

IMPORTANT: Even if you are already working on a solution with your bank, you are still required to 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.

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

Step 2. Go to the Court for an "Informational Session" and "First Call" Mediation

A few days or weeks after you “file” your Answer with the Court, the court clerk will send you a “Scheduling Notice for Informational Session and First Call Mediation.” Read the notice carefully. You do not need to file any documents or financial forms before your first mediation. See sample Scheduling Notice form.

This notice will tell you the time, date and place of the “informational” meeting and your first mediation. Both of these meetings will be held on the same day. First, attend the informational session. Make sure you are 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:

All of your court papers
Any other documents that you think might be important

You will not need to provide or file any of these documents at your first mediation, but having them with you can be helpful.

INFORMATIONAL SESSION:

At the Informational Session a judge and a housing counselor will explain court proceedings, including how the mediation program works.

Want to preview or review the Informational Session information? Go here to view the standard slide show presentation for homeowners. (Reminder: Viewing this information online is not enough. You must attend the session.

MEDIATION:

After the informational session and before your mediation, you will be asked to complete and submit a “Financial Information Form (link is external). Fill out and hand in your form. Then a mediator will call your name from a list. You may have to wait for your turn. This first mediation session is expected to take 30 to 45 minutes.

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 has helped 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?

First, the mediator will lay the groundwork. He will gather relevant information, such as:

your goals (such as, keeping your home, or not; modifying your loan; selling your house, etc.)
what options are available with your type of loan (depending on who holds the mortgage, who the servicer is, whether a government agency guarantees the loan, etc.)
your monthly income

Second, the mediator will help you and the mortgage holder determine whether there are "workout options" to explore. If there are, the mediator will schedule a second mediation. He will create a document checklist for you. These are the items that you will need to provide to the court and to the bank's attorney. You will be given a deadline for doing this.

NOTE: At the end of the session, the mediator fills out a report. It is important that all details of agreements and next steps are explained clearly in the report. So politely insist that the report include all relevant details before you leave. This includes clear instructions about steps each party must take and their deadlines.

More tips:

Whatever happens, do not agree to anything unless you are sure of your position!

Remember! Specific programs and options apply depending on the type of loan you have, so you may have more options than you thought.

Step 3: If you are scheduled for a second mediation, prepare and file your financial packet and complete any other assigned tasks.

If it is decided at the first mediation session that you will be pursuing a "loan modification," the mediator will probably require you to complete a more detailed packet of financial information.

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 bank's financial packet you will need to provide:

the lender's financial form, asking about your income and expenses
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 Documentation Requirements here: Proof of Income Checklist (link is external))
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:

Complete the required financial forms.
Make two copies of your documents.
Send the original completed financial packet to the court.
Send a copy of the completed financial packet to the bank’s lawyer.
Keep the second copy for yourself.

Step 4. Follow up with everything the mediator requires.

Beyond Steps 1-3, your case will take its own course. You may have one or more mediation sessions. Here are some basics:

Stay in contact with the bank.
Complete your assignments on time.
Inform the court and the bank's lawyer of any updates you send to the bank.
Attend all follow-up mediation sessions.

Common Mediation 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,
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. This means that neither party acts maliciously and that both parties negotiate honestly and fairly.

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, do not 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 with the financial information I get from the bank’s lawyer?

The Plaintiff (bank) is required to file different financial information. 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. The formula that the mediator uses will yield useful results only if the dollar amounts being used are accurate.

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?

The mediator might file a “Non-Compliance Report” with the Court. With this report, the mediator is asking the court to determine if the bank has failed to mediate in good faith. Also, you can ask the court to fine the bank, or punish them in some way, for not following the rules by filing a Motion for Sanctions.

REVIEW

Take one step at a time.
Ask for mediation right away after you are served with court papers; the deadline is 20 days.
Go to the informational meeting and first call mediation; take all of your court papers.
If you are scheduled for more mediation sessions, complete everything required before the deadlines. Call the Foreclosure Prevention Hotline: 1-888-664-2569 if you need help.
Send all required forms and financial statements to the court. Send copies to the mortgage company’s lawyer. Keep copies for yourself.
Read all notices from the court carefully.
Don’t miss your court dates. If you do, you lose.
Be prepared.
Bring a housing counselor or other “coach” to your court sessions if you need support.

Find more information on the Maine Court website (link is external)

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: [email protected] (link sends e-mail)

Updated August 2014
PTLA # 672