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Dear Magi Law, I’ve been ordered to foreclosure mediation with the bank: what happens now?


If you’re in the process of mortgage foreclosure, it’s perhaps an understatement to suggest that the current system is frustrating and emotionally draining. This is true for all parties involved, on the one hand the individual or family being foreclosed may feel that banks only care about being paid; and on the other hand banks usually see themselves as businesses whose purpose is to generate profit. Understanding the mediation process can be a powerful tool for the home owner if you’re proactive!

The Florida Supreme Court created the foreclosure mediation process to get both parties to self-determine if any resolution is possible before the Court arrives at a final judgment. This means the mediator is not a judge or a person who is going to decide the outcome of matter. The mediator’s job is to help the parties to arrive at an outcome that everyone can live with. Does this mean that you will get your bank to work out new terms so you can keep your home? The short answer is maybe.

The reality is that most banks would prefer to avoid mediation because it’s usually an expense on their part (There Attorney’s fees, mediator, and program fees), it slows the foreclosure process (foreclosure process can’t proceed until mediation is complete), and it requires them to have a representative with full decision making authority present (usually via telephone).

If you (and your lawyer) attends mediation ill prepared you could very well lose your one chance to mediate. The lesson here is to do it right and be prepared. If you’re in foreclosure mediation, court ordered or not, the very first thing you should do (weeks in advance) is to contact the individual at the bank who is working on your case file and complete an application for the making Homes Affordable Modification Program (HAMP).

Next, send a copy of your completed application to the banks attorney of record and get confirmation from both contacts that they received it, it’s completed and on record. This will help to reduce the possibility of lost, misplaced or incomplete applications. The last thing you want is to attend mediation and the banks’ decision maker does not have an application in front of them or an incomplete one, which means that no decision can be made, you’re at an impasse and mediation is over.
This happens in many cases, but it doesn’t have to happen to you. If your application is complete and received, mediation can be productive because it can be determined if you qualify for HAMP or an in-house modification program. Home modification usually comes in four flavors:
1. Interest rate reduction
2. Term extension, e.g. 40 years
3. Short sale; or
4. Deed in lieu of sale

Of course, getting a reduction in principle would be desirable for many home owners, but the reality is that banks are hard pressed to put this option on the table. Note: even if you bring a completed application with you, and the bank doesn’t have your application in front of them, they will need time to review it and it won’t happen at mediation.
Kenrick A. Pratt, Esq.

Magi Law, LLC.
Disclaimer: This Law Guides within this web site are for educational purposes only. For specific legal advice that applies to your individual situation, you must be a client of our law firm


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