Alternative Dispute Resolution
Administrative Hearings within five days. Te Office of Administrative Hearings must conduct the mediation within sixty days after the Request is filed, but note that the Office of Administrative Hearings may continue for up to thirty days. Te Office of Administrative Hearings must report to the Court within the earlier of five days of meeting or end of the sixty day period. Te mediator’s role is neutral in these hearings, and
cannot dictate an outcome. It is important to distinguish between mediation and required arbitration where the third party arbitrator adjudicates the dispute. Te secured party must attend and must have authority to mediate or must be readily able to contact someone with such authority. In representing a client in mediation, an attorney must
first properly and timely file the request for mediation. Te borrower and lender are also required to exchange all necessary documents between themselves 20 days prior to mediation. Te Office of Administrative Hearings will send a list of required documents when they send out the date of the scheduled mediation, but these documents will likely include pay stubs, income tax returns, bank statements, etc. Te goal of mandatory mediation is to bring the
borrowers and loan servicers together at least once before the sale of the home. Currently 21 states now offer foreclosure
QuarterlyTrialReporter-3'5x4'5.pdf 8/7/2007 11:51:23 AM
mediation or negotiation programs, up from 11 states one year ago. Maryland’s program is one termed “opt-in” as the eligible homeowner must formally choose to participate. While an “opt-in” program is the most popular, participation rates by homeowners in other states are generally below 25%, while mandatory mediation programs have a participation rate of around 75%. Low participation clearly affects the value of these programs as obviously fewer homeowners benefit if fewer participate. As such, some jurisdictions are replacing their “opt-in” programs with automatically scheduled mediation programs. Te history of the Philadelphia program may be
instructive. Philadelphia originally began as an “opt-in” program only to change to an automatically scheduled foreclosure mediation program. Teir initial results under “opt- in” mediation had results of approximately 75% settlement reached between the parties, yet a participation rate of only around 20% of those eligible. Yet when the mediation became automatic, the results remained relatively unchanged as three out of four borrowers reached a settlement agreement even with the greater participation. Te new Maryland program requires that the lender
C M Y CM MY CY CMY K
complete the loss mitigation analysis, and notify the borrower 30 days before going ahead with the foreclosure sale if it declines to offer loss mitigation. Te borrower then has 15 days to request mediation, leaving only 15 days after such mediation until the sale. By placing the mediation so close to the end of the foreclosure sale the lender has less incentive to offer mitigation terms conducive to settlement of the matter. Much of the litigation fees have been paid at this point, and the final sale is simply days away. Te borrower also has little incentive to settle the matter, as he may have already made alternative housing arrangements assuming that his home would be sold in two weeks. Mediation would seem more economically practical
either prior to or at the start of the litigation process. From an emotional standpoint, the borrower may simply be too distraught during this period of time to successfully deal with the required preparation and hearing. For mediation to be successful, it does not require that the
result be that all borrowers keep their homes. It also allows for the negotiated exit from the property through short sale, deed in lieu of foreclosure as well as other remedies available. Te modification of loan terms may not be suitable in all instances. Te Obama administration has worked to reduce the number of foreclosures filed with the Making Home Affordable Program which allows some borrowers to refinance into lower interest rate mortgages and by providing an opportunity for borrowers to have their existing mortgages modified to create
34 Trial Reporter / Fall 2010
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60