How to Prepare For Your Foreclosure Mediation

Proper preparation is crucial for foreclosure mediation to ensure that the case will be resolved in an efficient and effective manner. Not only does this mean creating or gathering all documents but also knowing what to expect at your foreclosure mediation.

Financial information about the homeowner must be provided to give a clear picture of the borrower’s current financial situation. A monthly budget listing all of the borrower’s sources of income versus typical expenditures had proven helpful. Documented proof can be provided by receipts of relevant items purchased, copies of cancelled checks, bank statements, etc. Paycheck stubs for the last three months, W-2’s for the last two years, or copies of the last two years’ tax returns are also beneficial and often required. Credit card, retirement account, and all other investment statements should be presented as well.

The homeowner should also gather all information pertaining to the real estate property in danger of foreclosure. Appraisals or similar evaluation on the property may serve as evidence of the property’s value. Photographs of all of the rooms in the house, the yard, and all buildings on the lot provide supporting information about the homestead. A copy of the mortgage contract will be necessary if its terms are in dispute. And, a copy of the homeowner’s insurance policy or certificate may be required as well.

When preparing for mediation, the borrower must realize the nature of the mediation process. This requires an understanding of the mediator’s role as a neutral and impartial third party in the settlement process. It is not the mediator’s duty to give legal advice to either party. Therefore, the homeowner must thoroughly review the mortgage contract and exhibits and make sure he or she if familiar with all of its terms and conditions prior to the foreclosure mediation. Borrowers typically appear at foreclosure mediations unrepresented; however, if he or she does not understand the legal implications of the proceeding, they should seek out legal representation.

Both parties should not only be prepared to negotiate at this meeting but should also appear with an open mind and good faith intent to collaborate. The lender and borrower must remain open to considering alternative viewpoints and remedies. The final outcome of foreclosure mediation, as in any mediation, should be a mutually agreed upon solution that will be workable in the long run.

On final note, the borrower must realize that mediation is not a guarantee to avoid foreclosure. In certain circumstances, and without a source of additional income or a way to decrease expenses, a short sale or deed in lieu of foreclosure (sometimes even “cash for keys”) may be the best and most reasonable solution. The better prepared a borrower is at mediation – with documentation and an understanding of the process and the issues involved – the better leverage the borrower will have during the settlement process and the better chance for a successful mediation.

If you or someone you know is facing foreclosure mediation, be sure to insist on a qualified, competent Circuit Court certified mediator with experience in foreclosure law and mortgage modifications.