Court-sponsored early mediation option offered to struggling homeowners being sued for foreclosure in D.C.
By Jennifer Ngai Lavallee, Legal Aid Society of the District of Columbia
Effective immediately, struggling homeowners who are sued for foreclosure in D.C. Superior Court will have the benefit of procedural enhancements designed to promote early case resolution through court-sponsored mediation offered at the outset of every case.
- See more at: http://dcbarvoices.typepad.com/dcbar/page/2/#sthash.hpiWzjAS.dpuf
By Jennifer Ngai Lavallee, Legal Aid Society of the District of Columbia
Effective immediately, struggling homeowners who are sued for foreclosure in D.C. Superior Court will have the benefit of procedural enhancements designed to promote early case resolution through court-sponsored mediation offered at the outset of every case.
- See more at: http://dcbarvoices.typepad.com/dcbar/page/2/#sthash.hpiWzjAS.dpuf
Mortgage foreclosure -- know your rights under the DC mediation program: Information for Homeowners - Foreclosure Mediation Program (FMP)
The District of Columbia’s Foreclosure Mediation Program (FMP) was created to address the foreclosure crisis in the District of Columbia. The Program provides homeowners and lenders with an opportunity to meet face-to-face to discuss alternatives to foreclosure.
Why Mediate? Foreclosure mediation is an inexpensive, cost effective alternative to help parties resolve disputes with the assistance of a qualified mediator or neutral third party. By working together to explore various options, agreements are often reached that benefit both parties.
Advantages Under the progam, both the homeowner and lender must mediate in good faith. The parties are required to honestly work toward a resolution in a fair and reasonable manner. In addition, if a mediation party sends a representative to mediation, the representative must have the authority to negotiate and/or modify the terms of a mortgage. This improves the chances that a homeowner and a lender can reach an agreement because a decision-maker is present (or accessible) during mediation.
Eligibility The program is open to owners of residential properties, which are improved by four or fewer single family dwellings, including condominiums or cooperative units, located in the District of Columbia, that receive a Notice of Default on Residential Mortgage (Notice of Default) (FM-1).
Mediation Costs There is a non-refundable fee of $50.00 paid by the homeowner upon submitting the Mediation Election form (FM-2) and Loss Mitigation Application (FM-1LM) to the Mediation Administrator.
Requirements: Before a lender can foreclose on a residential mortgage, it must mail to the property and last known address to each homeowner a completed copy of the Notice of Default (FM-1), and enclose the following items:
Foreclosure Mediation Agent Contact form (FM-1AC), the non-refundable fee and other required documents to the Mediation Administrator by electronic mail to DISB.mediation@dc.gov and regular first-class mail within two (2) business days of the date of mailing of the Notice of Default (FM-1). In addition, the lender must record with the Recorder of Deeds of the District of Columbia a copy of the Notice of Default (FM-1), excluding all the above enclosures except the Mediation Election form (FM-2), and any Supplement to the Notice of Default (FM-1), within two (2) business days of the date of mailing of the Notice of Default (FM-1) unless good cause is shown to the Mediation Administrator.
Homeowners must take affirmative action to participate in foreclosure mediation within thirty (30) days of the date of mailing of the Notice of Default (FM-1).
The following items must be mailed within thirty (30) days of the date of mailing of the Notice of Default (FM-1):
If a homeowner does not elect to participate in mediation, a mediation certificate will be issued to the lender within forty five (45) to sixty (60) days of the date of mailing of the Notice of Default (FM-1).
If a homeowner elects to participate in mediation, the lender is required to participate. Accordingly, mediation must take place within forty-five (45) days and conclude within ninety (90) days of the date of mailing of the Notice of Default (FM-1), unless the parties mutually consent to an extension of up to thirty (30) days. No matter how long the process, a lender may not exercise a power of sale until a mediation certificate is issued by the Mediation Administrator.
Mediation Scheduling Once a homeowner elects to participate in mediation by submitting the original, completed Mediation Election form (FM-2), the completed Loss Mitigation Application (FM-1LM), and the non-refundable fee of $50.00 to the Mediation Administrator, a Scheduling Notice will be sent by the Mediation Administrator to all mediation parties. The Scheduling Notice will contain the date, time and location of the mediation session, in addition to the contact information for the randomly assigned mediator. Foreclosure mediation cannot exceed two (2) sessions, each two (2) hours in duration; unless the Mediation Administrator schedules another session if there is a reasonable likelihood the mediation parties will reach a settlement agreement.
In addition, the mediation parties may agree to extend mediation for an additional thirty (30) days beyond the ninety (90) day period by mutual consent by executing a Mediation Extension Form (FM-3EX).
A mediation party may cancel mediation at any time by filing a Cancellation of Mediation Form (FM-X1). Upon the cancellation of mediation by all homeowners, the Mediation Administrator will cancel mediation and issue a mediation certificate to the lender. Upon the cancellation of mediation by a lender, the Mediation Administrator will cancel the Notice of Default (FM-1) and mediation.
What to Bring to Mediation Homeowners (or representatives) must bring to mediation his/her most recent tax return, W-2, last two (2) pay stubs, or any other documentation of homeowner’s household income, including, but not limited to, benefit statements, bank statements, alimony or child support documents, etc.; and any other information requested by the Mediation Administrator or mediator.
Final Agreements The parties may agree to modify a loan on a permanent basis or the homeowner may agree to relinquish the home. Any settlement agreement reached as a result of mediation must be reduced to writing and executed by the mediation parties within five (5) business days of the date of agreement by the mediation parties.
If the homeowner fails to fulfill the obligations of the agreement, the lender may apply for a mediation certificate by filing an Application for a Mediation Certificate Due to Breach (FM-10L). If the lender fails to fulfill the obligations of the agreement, the homeowner may request the Mediation Administrator to issue an Order to Perform by filing an Application for Order to Perform due to Breach (FM-10B).
Penalties A lender is subject to a minimum $500.00 civil penalty for failure, in person or through a representative to: (1) attend mediation; (2) bring any required document to mediation or send to the Mediation Administrator required documents five (5) business days prior to mediation; or (3) participate in good faith in mediation. By contrast, if a homeowner fails to act in good faith, e.g., attend mediation, etc., a mediation certificate will be issued to the lender; after which, the lender may proceed with foreclosure.
If a lender breaches the terms of a settlement agreement into which the parties enter after mediation, the lender must pay a $1,000.00 penalty and perform according to the terms of the agreement. If the homeowner breaches the terms of a settlement agreement, the lender may apply for a mediation certificate, which may be issued within ten (10) days of receiving the request.
What if a Party does not Speak English and Needs an Interpreter? Homeowners may be entitled to free written translation and oral interpretation services when participating in the program. Please contact the Foreclosure Mediation Administrator at (202) 442-7848 or DISB.mediation@dc.gov if you require language assistance.
Additional Information: For more information about the Foreclosure Mediation Program please call the Foreclosure Mediation Administrator Ben Arnold at (202) 442-7848.
The District of Columbia’s Foreclosure Mediation Program (FMP) was created to address the foreclosure crisis in the District of Columbia. The Program provides homeowners and lenders with an opportunity to meet face-to-face to discuss alternatives to foreclosure.
Why Mediate? Foreclosure mediation is an inexpensive, cost effective alternative to help parties resolve disputes with the assistance of a qualified mediator or neutral third party. By working together to explore various options, agreements are often reached that benefit both parties.
Advantages Under the progam, both the homeowner and lender must mediate in good faith. The parties are required to honestly work toward a resolution in a fair and reasonable manner. In addition, if a mediation party sends a representative to mediation, the representative must have the authority to negotiate and/or modify the terms of a mortgage. This improves the chances that a homeowner and a lender can reach an agreement because a decision-maker is present (or accessible) during mediation.
Eligibility The program is open to owners of residential properties, which are improved by four or fewer single family dwellings, including condominiums or cooperative units, located in the District of Columbia, that receive a Notice of Default on Residential Mortgage (Notice of Default) (FM-1).
Mediation Costs There is a non-refundable fee of $50.00 paid by the homeowner upon submitting the Mediation Election form (FM-2) and Loss Mitigation Application (FM-1LM) to the Mediation Administrator.
Requirements: Before a lender can foreclose on a residential mortgage, it must mail to the property and last known address to each homeowner a completed copy of the Notice of Default (FM-1), and enclose the following items:
- Contact information through which the homeowner may reach an agent or representative of the lender who has authority to explain the mediation process;
- A recommendation that the homeowner seek housing counseling services;
- Contact information for at least one local HUD approved housing counseling agency;
- A description of all loss mitigation programs that the lender offers which may be applicable to the mortgage and the eligibility requirements for those programs;
- A Loss Mitigation Application (FM-1LM) for any available loss mitigation programs and instructions for completing and submitting the application;
- A Mediation Election form (FM-2) for opting into mediation; and
- An envelope addressed to the lender and an envelope addressed to the Mediation Administrator.
Foreclosure Mediation Agent Contact form (FM-1AC), the non-refundable fee and other required documents to the Mediation Administrator by electronic mail to DISB.mediation@dc.gov and regular first-class mail within two (2) business days of the date of mailing of the Notice of Default (FM-1). In addition, the lender must record with the Recorder of Deeds of the District of Columbia a copy of the Notice of Default (FM-1), excluding all the above enclosures except the Mediation Election form (FM-2), and any Supplement to the Notice of Default (FM-1), within two (2) business days of the date of mailing of the Notice of Default (FM-1) unless good cause is shown to the Mediation Administrator.
Homeowners must take affirmative action to participate in foreclosure mediation within thirty (30) days of the date of mailing of the Notice of Default (FM-1).
The following items must be mailed within thirty (30) days of the date of mailing of the Notice of Default (FM-1):
- To the Mediation Administrator: original, completed Mediation Election form (FM-2), completed Loss Mitigation Application (FM-1LM) along with most recent tax return, W-2, last two (2) pay stubs, and any other documentation of household income including, but not limited to, benefit statements, bank statements, alimony or child support documents, etc., and the non-refundable fee of $50.00. The preaddressed envelope to the Mediation Administrator that is included with the Notice of Default (FM-1) should be used.
- To the Lender: copy of completed Mediation Election form (FM-2), and completed Loss Mitigation Application (FM-1LM) including most recent tax return, W-2, last two (2) pay stubs, and any other documentation of household income including, but not limited to, benefit statements, bank statements, alimony or child support documents, etc. No additional fee is required. The preaddressed envelope to the lender that is included with the Notice of Default (FM-1) should be used.
If a homeowner does not elect to participate in mediation, a mediation certificate will be issued to the lender within forty five (45) to sixty (60) days of the date of mailing of the Notice of Default (FM-1).
If a homeowner elects to participate in mediation, the lender is required to participate. Accordingly, mediation must take place within forty-five (45) days and conclude within ninety (90) days of the date of mailing of the Notice of Default (FM-1), unless the parties mutually consent to an extension of up to thirty (30) days. No matter how long the process, a lender may not exercise a power of sale until a mediation certificate is issued by the Mediation Administrator.
Mediation Scheduling Once a homeowner elects to participate in mediation by submitting the original, completed Mediation Election form (FM-2), the completed Loss Mitigation Application (FM-1LM), and the non-refundable fee of $50.00 to the Mediation Administrator, a Scheduling Notice will be sent by the Mediation Administrator to all mediation parties. The Scheduling Notice will contain the date, time and location of the mediation session, in addition to the contact information for the randomly assigned mediator. Foreclosure mediation cannot exceed two (2) sessions, each two (2) hours in duration; unless the Mediation Administrator schedules another session if there is a reasonable likelihood the mediation parties will reach a settlement agreement.
In addition, the mediation parties may agree to extend mediation for an additional thirty (30) days beyond the ninety (90) day period by mutual consent by executing a Mediation Extension Form (FM-3EX).
A mediation party may cancel mediation at any time by filing a Cancellation of Mediation Form (FM-X1). Upon the cancellation of mediation by all homeowners, the Mediation Administrator will cancel mediation and issue a mediation certificate to the lender. Upon the cancellation of mediation by a lender, the Mediation Administrator will cancel the Notice of Default (FM-1) and mediation.
What to Bring to Mediation Homeowners (or representatives) must bring to mediation his/her most recent tax return, W-2, last two (2) pay stubs, or any other documentation of homeowner’s household income, including, but not limited to, benefit statements, bank statements, alimony or child support documents, etc.; and any other information requested by the Mediation Administrator or mediator.
Final Agreements The parties may agree to modify a loan on a permanent basis or the homeowner may agree to relinquish the home. Any settlement agreement reached as a result of mediation must be reduced to writing and executed by the mediation parties within five (5) business days of the date of agreement by the mediation parties.
If the homeowner fails to fulfill the obligations of the agreement, the lender may apply for a mediation certificate by filing an Application for a Mediation Certificate Due to Breach (FM-10L). If the lender fails to fulfill the obligations of the agreement, the homeowner may request the Mediation Administrator to issue an Order to Perform by filing an Application for Order to Perform due to Breach (FM-10B).
Penalties A lender is subject to a minimum $500.00 civil penalty for failure, in person or through a representative to: (1) attend mediation; (2) bring any required document to mediation or send to the Mediation Administrator required documents five (5) business days prior to mediation; or (3) participate in good faith in mediation. By contrast, if a homeowner fails to act in good faith, e.g., attend mediation, etc., a mediation certificate will be issued to the lender; after which, the lender may proceed with foreclosure.
If a lender breaches the terms of a settlement agreement into which the parties enter after mediation, the lender must pay a $1,000.00 penalty and perform according to the terms of the agreement. If the homeowner breaches the terms of a settlement agreement, the lender may apply for a mediation certificate, which may be issued within ten (10) days of receiving the request.
What if a Party does not Speak English and Needs an Interpreter? Homeowners may be entitled to free written translation and oral interpretation services when participating in the program. Please contact the Foreclosure Mediation Administrator at (202) 442-7848 or DISB.mediation@dc.gov if you require language assistance.
Additional Information: For more information about the Foreclosure Mediation Program please call the Foreclosure Mediation Administrator Ben Arnold at (202) 442-7848.
Mortgage foreclosure -- know your rights under rules of the federal CFPB
The Federal Consumer Financial Protection Board provides Protections for Struggling Borrowers, as authorized by the Dodd-Frank statute The CFPB’s mortgage servicing rules ensure that borrowers in trouble get a fair process to avoid foreclosure. Borrowers shouldn’t have to worry about mortgage servicers cutting corners or losing applications for relief. They should be told about their options and given time to apply and be considered for loan modifications and other alternatives. Most of all, they shouldn’t be surprised by the start of a foreclosure proceeding until they have had time to explore all available options. If they act diligently to seek alternatives, they should not face a foreclosure sale before their applications have been evaluated. The new protections for struggling borrowers include:
The Federal Consumer Financial Protection Board provides Protections for Struggling Borrowers, as authorized by the Dodd-Frank statute The CFPB’s mortgage servicing rules ensure that borrowers in trouble get a fair process to avoid foreclosure. Borrowers shouldn’t have to worry about mortgage servicers cutting corners or losing applications for relief. They should be told about their options and given time to apply and be considered for loan modifications and other alternatives. Most of all, they shouldn’t be surprised by the start of a foreclosure proceeding until they have had time to explore all available options. If they act diligently to seek alternatives, they should not face a foreclosure sale before their applications have been evaluated. The new protections for struggling borrowers include:
- Restricted Dual-Tracking: Under the CFPB’s new rules, dual-tracking – when the servicer moves forward with foreclosure while simultaneously working with the borrower to avoid foreclosure – is restricted. Servicers cannot start a foreclosure proceeding if a borrower has already submitted a complete application for a loan modification or other alternative to foreclosure, and that application is still pending review. To give borrowers reasonable time to submit such applications, servicers cannot make the first notice or filing required for the foreclosure process until a mortgage loan account is more than 120 days delinquent.
- Notification of Foreclosure Alternatives: Servicers must let borrowers know about their “loss mitigation options” to retain their home after borrowers have missed two consecutive payments. They must provide them a written notice that includes examples of options that might be available to them as alternatives to foreclosure and instructions for how to obtain more information.
- Direct and Ongoing Access to Servicing Personnel: Servicers must have policies and procedures in place to provide delinquent borrowers with direct, easy, ongoing access to employees responsible for helping them. These personnel are responsible for alerting borrowers to any missing information on their applications, telling borrowers about the status of any loss mitigation application, and making sure documents get to the right servicing personnel for processing.
- Fair Review Process: The servicer must consider all foreclosure alternatives available from the mortgage owners or investors – those with decision-making power over the loan – to help the borrower retain the home. These options can range from deferment of payments to loan modifications. And servicers can no longer steer borrowers to those options that are most financially favorable for the servicer.
- No Foreclosure Sale Until All Other Alternatives Considered: Servicers must consider and respond to a borrower’s application for a loan modification if it arrives at least 37 days before a scheduled foreclosure sale. If the servicer offers an alternative to foreclosure, they must give the borrower time to accept the offer before moving for foreclosure judgment or conducting a foreclosure sale. Servicers cannot foreclose on a property if the borrower and servicer have come to a loss mitigation agreement, unless the borrower fails to perform under that agreement.
- Clear Monthly Mortgage Statements: Servicers must provide regular statements which include: the amount and due date of the next payment; a breakdown of payments by principal, interest, fees, and escrow; and recent transaction activity.
- Early Warning Before Interest Rate Adjusts: Servicers must provide a disclosure before the first time the interest rate adjusts for most adjustable-rate mortgages. And they must provide disclosures before interest rate adjustments that result in a different payment amount.
- Options for Avoiding Costly “Force-Placed” Insurance: Servicers typically must make sure borrowers maintain property insurance and if the borrower does not, the servicer generally has the right to purchase it. The CFPB’s rules ensure consumers will not be surprised by this insurance, which often can be more expensive than the insurance borrowers buy on their own. The rules say servicers must provide more transparency in this process, including advance notice and pricing information before charging consumers. Servicers must also have a reasonable basis for concluding that a borrower lacks such insurance before purchasing a new policy. If servicers buy the insurance but receive evidence that it was not needed, they must terminate it within fifteen days and refund the premiums.
- Payments Promptly Credited: Servicers must credit a consumer’s account the date a payment is received. If the servicer places partial payments in a “suspense account,” once the amount in such an account equals a full payment, the servicer must credit it to the borrower’s account.
- Prompt Response to Requests for Payoff Balances: Servicers must generally provide a response to consumer requests for the payoff balances of their mortgage loans within seven business days of receiving a written request.
- Errors Corrected and Information Provided Quickly: Servicers must generally acknowledge receipt of written notices from consumers regarding certain errors or requesting information about their mortgage loans. Generally, within 30 days, the servicer must: correct the error and provide the information requested; conduct a reasonable investigation and inform the borrower why the error did not occur; or inform the borrower that the information requested is unavailable.
- Maintain Accurate and Accessible Documents and Information: Servicers must store borrower information in a way that allows it to be easily accessible. Servicers must also have policies and procedures in place to ensure that they can provide timely and accurate information to borrowers, investors, and in any foreclosure proceeding, the courts.