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. In 2008, the Chief Justice of the Ohio Supreme Court put forth guidelines for Ohio’s county courts to implement residential foreclosure mediation programs. As a result, all counties in Ohio have some sort of mediation available to borrowers facing foreclosure. Read on to learn more about how Ohio’s foreclosure mediation programs work 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 homeowners and the lender. Mediation consists of a meeting between:
- the homeowners
- their lender, and
- an impartial third-party (the mediator).
At the meeting, the parties discuss the homeowner'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
- repayment agreement
- forbearance agreement
- short sale, or
- deed in lieu of foreclosure.
(To get information about each of these options, see our Alternatives to Foreclosure area.)
Ohio Foreclosure Process
In Ohio, 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 Ohio 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?)
Overview of the Ohio Foreclosure Mediation Program Model
In February 2008, Chief Justice Thomas J. Moyer of the Ohio Supreme Court announced The Foreclosure Mediation Program Model, which was the first of its kind in the U.S. The model focuses on providing mediation for residential foreclosure cases in Ohio and allows courts to adjust the program to suit their needs, as well as the needs of the community.
Here's how the program works:
Notification of Mediation
The lender provides a form for requesting mediation to the homeowner along with the complaint and summons.
The Mediation Process
When the homeowner requests mediation, the court sends questionnaires to the homeowner. The homeowner completes the forms and returns them along with financial information to the designated mediation department at the court.
The mediation department reviews the documents to determine if mediation is appropriate in the homeowner’s situation. The mediation department then sends a status report to homeowner and the court regarding whether or not mediation is approved. The court may order mediation if it so chooses. If mediation is approved, the mediation department will provide notice to the homeowner and lender regarding the time and place for the mediation.
A mediation session will then take place in accordance with the court’s alternative dispute resolution procedures.
Mediation and the Foreclosure Process
While the mediation is pending, there is no official postponement of the foreclosure action or the homeowner’s time to answer the foreclosure complaint. If the homeowner wants to stop the process, the homeowner must officially request a stay by filing a motion.
Typically, the homeowner will need to provide the following to the lender before the mediation:
- two most recent pay stubs
- the last two months of bank statements
- the questionnaire and financial worksheet provided by the mediation department or the lender, and
- tax records (sometimes).
The lender must provide:
- payment history of the loan, and
- evidence of its standing to proceed with foreclosure.
Who Must Participate in the Mediation Session
The homeowner, lender, and its attorney must participate in the mediation sessions. During the session, all parties sit at the table as equals in a discussion.
After the Mediation
If a voluntary agreement is reached, the parties should memorialize the agreement in one of three ways:
- a written agreement signed by all parties
- an agreement that is read into the record by a court reporter, or
- an agreement that is tape-recorded with all parties identifying themselves and indicating their consents to the agreement.
Once the agreement has been memorialized, the lender will typically file a motion to dismiss the foreclosure case without prejudice. If a voluntary agreement is not reached, the foreclosure case continues on the trial docket.
While all counties in Ohio have some form of mediation available to homeowners facing foreclosure, there are some minor differences between programs since local courts may modify the mediation model.
For example, in Cuyahoga County, homeowners attend a pre-mediation conference as part of the mediation program if their case is accepted into the mediation program. At the conference, the homeowners are given a questionnaire that must be filled out and returned to the court within 14 days. Failure to attend the conference or to fill out the questionnaire results in the case being returned to the foreclosure docket. For more information on Cuyahoga’s foreclosure mediation program go to http://cp.cuyahogacounty.us and click on “Departments,” then “Foreclosure Mediation.”
In Franklin County, homeowners first schedule an appointment with a HUD-approved housing counseling agency. The HUD-approved counseling agency helps prepare the financial information needed for mediation. More information can be found at www.franklincountyohio.gov/homeownerhelpline.
Should You Participate in the Foreclosure Mediation Program?
Even though participating in a mediation program does not guarantee that a foreclosure will be avoided, it doesn't hurt to participate in the session. 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 foreclosure mediation programs in Ohio, go to www.supremecourt.ohio.gov/foreclosure. Click on “Ohio Foreclosure Mediation Contact Information by County” to obtain the contact information for your county.