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 New Mexico, certain counties have foreclosure assistance available to homeowners facing foreclosure. Read on to learn more about which counties have mediation programs, how the 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 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.)
How Foreclosures Work in New Mexico
In New Mexico, 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 our Judicial v. Nonjudicial Foreclosure topic area.
To learn about the specific foreclosure laws in New Mexico, see Summary of New Mexico’s Foreclosure Laws.
New Mexico Mediation
New Mexico does not have a statewide foreclosure mediation program. However, the First Judicial District (which includes Santa Fe, Rio Arriba, and Los Alamos Counties) and Sandoval County (which is in the Thirteenth District) have implemented court-related foreclosure mediation programs. Additionally, certain other counties provide for mediation, though it is not limited to foreclosure cases, if the parties to the lawsuit request it.
Foreclosure Mediation in Santa Fe, Rio Arriba, and Los Alamos Counties
The First Judicial District Court, which includes Santa Fe, Rio Arriba, and Los Alamos Counties, has established a foreclosure mediation program.
Notification. When the foreclosure complaint and summons are served, the homeowners will also receive a notification about mediation.
How to elect mediation. Either party, the homeowner or the lender, may request a referral to foreclosure mediation. Also, the judge may refer a case to mediation if he or she thinks it will be beneficial.
Pre-mediation phone call. Before the mediation takes place, there will be a conference call where the homeowners will be asked about what they would like to achieve. That is, do they want to keep the home by completing a loan modification, sell the property via a short sale, provide the lender with a deed in lieu of foreclosure, or some other optoin. (Learn more about short sales and deeds in lieu of foreclosure.)
A timeline for the process will also be determined and the parties will decide what information must be exchanged. For example, the homeowner will probably need to provide documentation regarding income and expenses such as:
- proof of income (if employed)
- current pay stubs
- bank statements
- profit and loss statement (if self employed), and
- a list of expenses.
Eligibility for mediation. The program is designed for owner-occupied residences of up to four units, but it is available in any foreclosure case.
Additional requirement for the homeowners. The homeowners must meet with a consumer credit counselor or a HUD-certified housing counselor prior to the mediation session.
Foreclosure Mediation in Sandoval County
Sandoval County, which is part of the Thirteenth Judicial District in New Mexico, has also implemented a program to assist homeowners facing foreclosure.
How to elect mediation. When a foreclosure is filed in Sandoval County, the borrower also receives information about the program along with the complaint and summons. To participate in foreclosure settlement facilitation (mediation), the homeowner files a motion with the court.
Availability of mediation. The foreclosure settlement facilitation program is a Sandoval County program, but if a homeowner who resides in Cibola or Valencia counties (also in the Thirteenth Judicial District) requests foreclosure mediation, the request would be granted.
Mediation Programs in Bernalillo County
The local rules in some counties, including Bernalillo County (which is the largest county in New Mexico and includes the city of Albuquerque), require mediation if it is requested by any party to a lawsuit. To find out if there is optional mediation in your county, contact a local attorney or look in the local rules.
Potential Statewide Mediation in New Mexico
Senate Bill 75 was introduced in New Mexico in January 2012. If it had passed, the New Mexico Foreclosure Mediation Act would have implemented a statewide mediation program for homeowners, but the bill died. Go to www.nmlegis.gov and select “Legislation” and “Bill Finder” and search for “Senate Bill 75” to learn more about the history of this bill.
Should You Participate in the Foreclosure Mediation Program?
Even though participating in one of the foreclosure mediation programs available in New Mexico does not guarantee that a foreclosure will be avoided, it doesn't hurt to attend the meeting. The lender may be more likely to agree to a nonforeclosure solution at a 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.