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 Maryland, 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.)
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:
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:
(To get information about each of these options, see our Alternatives to Foreclosure area.)
In Maryland, foreclosures are generally nonjudicial, but with court supervision. The process begins when the lender mails the borrower a Notice of Intent to Foreclose. The lender may then file its foreclosure 45 days later. (To learn about the specific foreclosure laws in Maryland, see our Summary of Maryland’s Foreclosure Laws.)
Maryland has established a mediation program to provide certain homeowners in foreclosure with the right to mediation. (Md. Code Ann. Real Prop. § 7-105.1.)
Maryland borrowers facing foreclosure are eligible for mediation if the property is:
Commercial and other non-owner occupied properties don't qualify.
Here's how the process goes:
When starting the foreclosure, the lender must send the homeowner a request for mediation form along with the foreclosure paperwork. (The lender also has the option to offer pre-filing mediation.)
The homeowner has 25 days to complete the request for mediation form and file it with the Circuit Court where the foreclosure action has been filed.
Homeowners must pay a non-refundable $50 fee when they file their request for mediation.
After the homeowner files the mediation request with the Circuit Court, the court refers the matter to the Maryland Office of Administrative Hearings (OAH). The OAH will schedule the mediation session (which will be within 60 days after it receives the request from the court) and notify the homeowner of the time, date, and place for the mediation session.
The OAH will send a list of required documents that the homeowner must provide along with notification of the scheduled mediation date. All documents must be provided 20 days prior to the mediation.
If the homeowner and lender are able to reach an agreement to avoid foreclosure, the mediator will draft an agreement. The lender and homeowner will both sign the agreement and receive a copy before leaving the mediation session.
If the parties do not reach an agreement at the mediation, or the 60-day mediation period expires without an extension granted by the OAH, the foreclosing party may schedule the foreclosure sale.
There have been reports that little actual negotiation or substantive discussion about how to save a homeowner's house occurs in Maryland's foreclosure mediations. (Of the approximately 9,000 foreclosure mediation cases closed through November 2013, only about 26% have resulted in an agreement between the homeowner and the lender.)
However, even though participating in Maryland’s foreclosure mediation program does not guarantee that you will avoid foreclosure, it doesn't hurt to participate. The lender may be more likely to agree to a nonforeclosure solution during mediation than if you try to work something out on your own. Or you might qualify for a loss mitigation option that you hadn’t previously considered.
For more information on Maryland’s foreclosure mediation program, go to www.mdhope.dhcd.maryland.gov and click on “Foreclosure Mediation.”
For questions regarding mediation scheduling, including information on mediation locations and postponements of mediation, you can contact the OAH at (410) 229-4100 or go to the OAH’s website at www.oah.state.md.us and click on “Foreclosure Mediation.”