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. Indiana has implemented a program where borrowers may request a face-to-face meeting with their lender at a foreclosure prevention settlement conference. Read on to learn more about how Indiana’s mediation program works and how you can benefit from the process.
(To learn about other options for dealing with foreclosure, visit Nolo's Foreclosure section.)
A foreclosure prevention settlement conference is a meeting with your lender’s representative. The settlement conference, which is facilitated by a local attorney, provides an opportunity to work out a deal with your lender before the foreclosure is completed.
At the settlement conference, 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 a settlement conference include:
(To get information about each of these options, see our Alternatives to Foreclosure area.)
Borrowers in Indiana may request a settlement conference, which is a face-to-face meeting with the lender to work out a foreclosure prevention agreement. (Ind. Code § 32-30-10.5 et seq.)
In Indiana, foreclosures are judicial, which means the lender must foreclose through the state court system. The lender initiates the foreclosure by filing a complaint and having it served on the borrower, along with a summons to appear in 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?
To learn about the specific foreclosure laws in Indiana, see Summary of Indiana’s Foreclosure Laws.
Most residential homeowners in Indiana are eligible for a settlement conference, however you are not eligible if:
Prior to the start of the foreclosure, the lender must send the borrowers a pre-suit letter at least 30 days before filing the case in court. This is a form letter that was created by the Indiana Housing and Community Development Authority, which will include the following:
The lender will then initiate the foreclosure process by filing a lawsuit in court. Under Indiana law, for foreclosures filed after June 30, 2011, on the first page of the foreclosure summons the lender must provide notice to borrowers of their right to participate in a settlement conference.
The borrowers must notify the court no later than 30 days after the complaint and summons are served if they wish to participate in a settlement conference.
If the borrowers contact the court indicating they would like to schedule a settlement conference, the court will then issue a notice of a settlement conference.
The notice will order the lender and the borrowers to conduct a settlement conference on or before a date and time specified in the notice for the purpose of attempting to negotiate a foreclosure prevention agreement.
The lender and the borrowers must provide certain documents.
The borrowers must provide a copy of their completed loss mitigation package, which includes information about income, expenses, assets, and liabilities, as well as an application for the federal government’s Making Home Affordable program, to the lender’s attorney and the court at least 30 days before the conference.
The lender must send the following items to the borrowers by certified mail (no later than 30 days before the date of the settlement conference):
The lender must bring the following documents to the settlement conference:
An attorney for the lender must attend the settlement conference, and an authorized representative of the lender must be available by telephone.
The borrowers have the right to be represented by an attorney or assisted by a mortgage foreclosure counselor in person or by telephone.
The next steps depend on whether you come to an agreement with the lender, or not.
What happens when an agreement is reached? If the lender and the borrowers agree to enter into a foreclosure prevention agreement, the agreement must be put in writing and signed by both parties, with each party retaining a copy. The lender must also file a copy of the signed agreement with the court.
The foreclosure will then be dismissed or postponed so long as the borrowers comply with the terms of the foreclosure prevention agreement.
What happens if an agreement is not made? If the lender and the borrowers are unable reach an agreement, the lender must file a notice with the court indicating:
Even though participating in an Indiana foreclosure prevention settlement conference does not guarantee that a foreclosure will be avoided, it doesn't hurt to participate in the conference. The lender may be more likely to agree to a nonforeclosure solution at a settlement conference 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 foreclosure prevention in Indiana, including settlement conferences, go towww.in.gov/judiciary/selfservice/2359.htm.