National Center for Technology and Dispute Resolution

A number of States now require at least one mediation session prior to any judicial foreclosure of any residential property (often defined as four units or fewer, at least one of which is owner-occupied). The State where I reside, Massachusetts, is considering legislation to require mandatory mediation in a judicial foreclosure. By “mandatory” I mean that if the homeowner elects mediation, the lender/servicer must attend. I have been following this legislation and would be interested in discussing it with anyone interested.

In a larger context, I believe that ODR is an excellent venue for foreclosure mediation for at least the following reasons. In the first place, the lender/servicer will often be headquartered hundreds, or thousands, of miles away from any given property being foreclosed against. Few other types of dispute will, almost by definition, involve such distances between the disputants. ODR shrinks the miles to insignificance. Secondly, lender/servicers are not sufficiently staffed to handle all the different court appointments necessary to prosecute the current high number of foreclosures. One lender/servicer representative working from his or her desk can handle far more cases than would be possible were direct court appointments necessary. Thirdly, most homeowner foreclosures are not that unique; their “complexity” pales beside that of commercial or industrial foreclosure actions. This characteristic would allow lender/servicers “standardize” to some extent their responses to requests to modify loans, etc. Such standardization would fit neatly into a paradigm that used written, rather than verbal, communication.

I would be pleased to discuss the above, or other aspects of foreclosure mediation through the ODR process.

One of the issues in these cases is the disparate location of lenders and borrowers. Most lenders have sold off their mortgages to distant servicers, meaning that a borrower is going to have a difficult time getting in touch with someone they trust to discuss a modification. ODR is used to build trust. How could that work here?

I like the idea of trust in the system. Ethan stated in the introductory posting that there are typical options for handling mortgage foreclosure disputes. What if a menue of options were included and the partis had to limit their discussions to those options? On the other hand, would that foreclose the idea of an informal, flexible process.

As to trusting the parties, could telepresence be used to enhance visuals? Also, what about the use of holograms so that the parties could see each other and feel as though they were in the same room even though they are phsically distant? While both processes are probably cost prohibitive and seem really futuristic for us, they are both available processes and I suspect not so costly in the near future.

Susan

Hello everybody in this topic! I live in Argentina, I do not know whether you remember, but a couple of years ago, exactly December 2001- January 2002, our economy came to a point of standstill. It was terrible since everything related to Finance and Economy was based on a dollar basis and the Government decided to turn into “pesos” (our currency)all credits & debts. At the same time the price of each Dollar was no longer =U$s1. The price of the dollar started climbing up to U$s1= .00!!!! You can´t imagine the CHAOS CREATED!!!
So everybody started suing everybody, there were queues of 3, 4 blocks´long outside the courts…
But we managed to find out a solution. In our country Mediation is mandatory since 1995, but for certain specifically excluded topics.
Any topic realted to Mortgages or foreclosures had to go through mediation before going to the courts. Then mediation became one way out.
There were thousands of mediations related to this topic and the work of mediators found a great solution which was trusted by everybody. It was such a a great job that ordinary people started using the mechanism to solve anything related to pesos/ dollar. It was called “esfuerzo compartido” (a kind of “collaborative effort”), by this method the debtor had to offer more than per dollar, such as - .80 per dollar and the creditor must accept that offer even though the price of the dollar was higher than that.
This rearrengement of our finances was helped by mediation in a very important part. Mediaton became trusted by everyone, and anybody who had a financial issue related to the pesos/dollar question WANTED to go through mediation.
Mediation system became trusted by everybody.
Then as regards the question submitted by Katsh, I think going through mediation will certainly solve problems but, you have to bear in mind, every case is different and I´m sure (talking from my professional experience)that mediation will not bring an only and standarized solution. Every solution must be worked out from a collaborative point. When I say “worked out” I mean worked between the lender ( creditor), the houseowner (debtor) and the mediator who must attend both parties needs and contribute to find the perfect solution to the case.
At least it was the way in which it worked here, in Argentina.
So if you ask me (professionally speaking) if I am for “mandatory Mediation” process in this particular case I would say A SOLID YES!!!
I am attorney at law, sworn translator (specialised in law) as well al newly practicing mediator.
I hope I had given you some material for thought.
Greetings, Pat.

Hi Ethan,

It appears as though a neighboring state has already instituted a similar foreclosure mediation program: Connecticut.

http://www.jud.ct.gov/foreclosure/attorney_qs.htm

This information indicates that the mediation sessions take place in-person at various courthouses throughout the state and that while a mortgagee may be represented by counsel at the mediation, with proper authority and availabilty remotely, if the mortgager is represented, both the client and counsel must be present. While the implementation of ODR would be an interesting proposition, do you think that holding the meeting in person holds all parties more accountable for the future of the mortgage?