In response to the ongoing foreclosure crisis in this country, many states have implemented mediation programs to assist homeowners in finding ways to avoid foreclosure. In Kentucky, the courts of Jefferson County initiated a foreclosure mediation program for homeowners starting March 30, 2009. Read on to learn more about how Jefferson County’s Residential Foreclosure Conciliation Program works and how you can benefit from the process.
(To learn about other options for dealing with foreclosure, visit Nolo's Foreclosure section.)
Foreclosure mediation (called a “conciliation conference” in Kentucky) is a process that is used to help homeowners avoid foreclosure by coming up with an alternate solution that benefits both the homeowners and the lender. Mediation consists of a meeting between:
At the meeting, the parties discuss the homeowners’ financial situation and try to negotiate a way for the homeowners 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:
(To get information about each of these options, see our Alternatives to Foreclosure area.)
In Kentucky, foreclosures are judicial, which means the lender must file a lawsuit in state court. The lender initiates the foreclosure by filing a complaint and having it served on the borrower, along with a summons to appear in court. Learn more about the Kentucky foreclosure process.
(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?)
Kentucky does not have a statewide foreclosure mediation program. However, Jefferson County, which includes the city of Louisville, has implemented a Residential Foreclosure Conciliation Program.
The Residential Foreclosure Conciliation Program provides early court intervention to homeowners whose properties are in foreclosure by referring eligible cases to a conciliation conference. The program provides homeowners with the opportunity to:
This program is considered to be an opt-in program, which means if homeowners want to participate in a conciliation conference, they must request it.
The program is available for residential, owner-occupied properties.
For every foreclosure filed, the court issues a notice that advises the homeowners of the program. The notice is included with the complaint for foreclosure that is served to the homeowner.
The notice will advise the homeowner of:
Participating in the program does not halt or delay the foreclosure. However, if the homeowner returns the financial forms and a certificate of compliance to the court, then a conciliation conference must be held (which the lender is required to attend) before a foreclosure sale can be completed.
The conciliation conference gives the homeowner the opportunity to:
As part of this program, homeowners can request a pro bono (free) attorney to represent them at the conciliation conference. The pro bono attorney will meet with the homeowners on the day of the conference to review paperwork and provide representation at the conference.
Here's how the conciliation program typically works:
Participating in Jefferson County’s Residential Foreclosure Conciliation Program does not guarantee that you will avoid foreclosure, but it might increase your chances of doing so. The lender may be more likely to agree to a nonforeclosure solution during mediation than if you try to negotiate a similar alternative on your own. Or you might qualify for a loss mitigation option that you hadn’t previously considered.
For more information on foreclosure alternatives available to Kentucky homeowners, go to www.protectmykyhome.org.