In response to the ongoing foreclosure crisis in this country, many states have implemented mediation programs to assist borrowers in finding ways to avoid foreclosure. If you are a homeowner facing foreclosure in Connecticut, you may be eligible to participate in the state’s foreclosure mediation program. Read on to learn more about how the program works and how you can benefit from the process.
(To learn about other options for dealing with foreclosure, visit Nolo's Foreclosure section.)
What is Foreclosure Mediation?
Foreclosure mediation is a process that is used to help homeowners avoid foreclosure by coming up with an alternate solution that benefits both the borrowers and the lender. Mediation consists of a meeting between:
- the borrowers
- their lender, and
- an impartial third-party (the mediator).
At the meeting, the parties discuss the borrower's financial situation and try to negotiate a way for the homeowner to keep the home or give up the property without going through a foreclosure. By working together, the parties are often able to reach an agreement.
Potential outcomes of mediation include:
- loan modification
- forbearance agreement
- short sale, or
- deed in lieu of foreclosure.
(To get information about each of these options, see our Alternatives to Foreclosure area.)
Connecticut Foreclosure Mediation
Connecticut has established a mediation program to provide certain homeowners in foreclosure with the right to mediation (Conn. Gen Stat. § Sec. 49-31k, et seq.)
Eligibility for Mediation
Connecticut homeowners in foreclosure are eligible for mediation if the property is:
- owner-occupied as the borrowers' primary residence, and
- is a one, two, three or four-family residential property.
Receiving Notice of Available Mediation
In Connecticut, foreclosures are judicial, which means the lender must file a lawsuit in state court. (To learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, see Will Your Foreclosure Take Place In or Out of Court?)
The lender initiates the foreclosure by filing a complaint and having it served on the borrowers, along with a summons to appear in court. (Learn more about the Connecticut foreclosure process.)
The lender must give notice to the borrowers about the foreclosure mediation program by attaching the following to the foreclosure complaint and summons:
- a Foreclosure Mediation Notice to Homeowner (JD-CV-94), which informs the borrowers of the availability of mediation
- a Foreclosure Mediation Certificate (JD-CV-108), which sets forth how to apply for mediation, and
- an Appearance form (JD-CL-12), so the borrowers can enter an appearance in the foreclosure action.
To participate in mediation, the borrowers must file the Foreclosure Mediation Certificate form (JD-CV-108) and the Appearance form (JD-CL-12) not more than 15 days from the return date on the summons. (However, the judge also has the discretion to send the case to mediation at any time provided the borrowers have filed an appearance in the case.)
If you misplace the forms, they are also available at any Superior Court clerk’s office, Court Service Center, or online at www.jud.ct.gov/webforms.
Who Must Attend Mediation
If mediation is elected, all borrowers must attend the mediation. This means if a married couple signed the mortgage, then both the husband and wife must attend the mediation. An attorney may accompany the borrowers to the mediation, but it is not a requirement. So, even if you do not have an attorney, you can still participate in mediation.
An attorney who attends the mediation on behalf of the lender must have authority to agree to a proposed settlement. Plus, the lender (or an authorized agent thereof) must be available by telephone.
A foreclosure mediator will also attend. Foreclosure mediators in Connecticut are Judicial Branch employees who are trained in mediation, as well as foreclosure law, and are knowledgeable about community-based resources and mortgage assistance programs.
The borrowers must bring to the mediation session:
- proof of income, if employed (generally, the two most recent paystubs or a profit and loss statement if self-employed)
- itemization of expenses
- copies of any completed applications for mortgage or financial assistance, and
- any other information that may be helpful in the mediation.
Cost to Participate in Mediation
There is no fee for borrowers to participate in Connecticut’s foreclosure mediation program.
Mediation and the Foreclosure Action
The court cannot enter a judgment of foreclosure until the mediation period has finished or the parties have otherwise terminated the mediation.
Termination of the Foreclosure Mediation Program
The foreclosure mediation program is scheduled to sunset on June 30, 2014, or after each case that was included in the program prior to June 30, 2014, has been completed.
Should You Participate in the Foreclosure Mediation Program?
Even though participating in Connecticut’s foreclosure mediation program does not guarantee that a foreclosure will be avoided, it doesn't hurt to participate in the program. The lender may be more likely to agree to a nonforeclosure solution during mediation than if you approach it outside of the program. Or you might qualify for a loss mitigation option that you hadn’t previously considered. For more information on Connecticut’s foreclosure mediation program, go to www.jud.ct.gov/foreclosure.