In response to the ongoing foreclosure crisis, several cities and towns in Rhode Island -- Providence, Cranston, Warwick, and Warren -- implemented mediation programs through municipal ordinances. However, since that time, Rhode Island enacted a state-wide foreclosure mediation program. Because in most cases the state program supersedes the local programs, most Rhode Island residents must use the state program.
There is one exception. If you were more than 120 days delinquent on your mortgage as of September 13, 2013, you can use the local foreclosure mediation programs in Providence, Cranston, Warwick, and Warren. If you fit into this category, read on.
(To learn about other options for dealing with foreclosure, visit Nolo's Foreclosure section.)
What is Foreclosure Mediation?
Foreclosure mediation (called a “conciliation conference” in Rhode Island) 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 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:
- loan modification
- repayment agreement
- forbearance agreement
- short sale
- deed in lieu of foreclosure.
(To get information about each of these options, see our Alternatives to Foreclosure area.)
Rhode Island Foreclosure Process
In Rhode Island, most foreclosures are nonjudicial, which means the lender does not have to go through state court to get a foreclosure. (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?)
Learn more about the Rhode Island foreclosure process.
Providence, Cranston, Warwick, and Warren Conciliation Conference Programs
The cities of Providence, Cranston, and Warwick, as well as the town of Warren, have implemented ordinances that require conciliation conferences to assist homeowners in finding an alternative to foreclosure. Under these ordinances:
- The lender must provide written notice to the city and homeowner of its intent to foreclose and file the notice with the recorder of deeds.
- Following the filing of such notice, the parties must participate in a mandatory loan/mortgage conciliation conference at a location mutually convenient to the parties. (The lender may participate by telephone.)
- The conciliation conference will be scheduled at a time and place to be determined by the conciliation conference coordinator. For properties in the cities of Providence and Warwick, the conference must be scheduled no later than 30 days following the mailing of the notice of intent to foreclose. For Cranston and Warren properties, the conference must be scheduled no later than 21 days following the mailing of the notice of intent to foreclose.
- The parties must complete the process within a period of 60 days from the initial notice (Providence and Warwick). In Cranston and Warren, the process must be completed within 45 days from the initial notice.
To be eligible for a conciliation conference, the property must be owner-occupied as the owner's principal residence and one of the following:
- a residential single-family dwelling
- a residential structure containing not more than four units
- a residential condominium, or
- a residential co-op unit.
Additionally, the property must be located within the City of Providence, Cranston, or Warwick, or the Town of Warren.
The homeowner will receive notice about the conciliation conference by certified and first class mail.
HUD-Approved Counseling Required
Prior to the scheduled conciliation conference, the homeowner will be assigned a loan counselor provided by a HUD-approved independent counseling agency. The homeowner must cooperate in all respects with the housing counseling agency, providing all necessary financial and employment information, as well as completing any and all loan resolution proposals and applications as needed.
Program Requirements Deemed Satisfied if Homeowner Doesn’t Respond
If after two attempts by the conciliation conference coordinator to contact the homeowner, the homeowner fails to respond to the request to appear for the conciliation conference (or the homeowner fails to cooperate in any respect with the requirements of the program), the lender may proceed with the foreclosure action after obtaining a certificate from the HUD-approved independent counseling agency.
Lender Not Required to Provide an Alternative to Foreclosure
If at the conciliation conference the parties cannot come to an agreement to renegotiate the terms of the loan in an effort to avoid foreclosure, the lender may proceed with the foreclosure (so long as the lender made a good faith effort at the conciliation conference.)
Special Exemption for Rhode Island Lenders
Certain lenders do not have to comply with the requirements of the ordinances. Lenders headquartered in the state of Rhode Island are exempt if:
- they service their own mortgages
- they provide homeowners with a forbearance relief program consistent with the loss mitigation requirements of the FHA, and
- the deed to be filed following the foreclosure action contains a certification to this effect.
Rhode Island Implements a Statewide Foreclosure Mediation Program in 2013
Effective September 13, 2013 through July 1, 2018, Rhode Island law requires lenders or their mortgage servicers or agents to provide written notice of the opportunity to participate in a mediation conference to borrowers who are not more than 120 days delinquent.
The state law supercedes the municipal ordinances, except to the extent that any homeowner who was more than 120 days delinquent at the time the new statewide program went into effect can apply for mediation under the local ordinance.
The statewide mediation program is scheduled to sunset (end) on July 1, 2018, at which time the municipal ordinances go back into effect (unless the statewide program is extended).
Should You Participate in a Conciliation Conference?
Even though participating in a conciliation conference does not guarantee that a foreclosure will be avoided, it doesn't hurt to participate in the program. The lender may be more likely to agree to a nonforeclosure solution during a conciliation 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
To read the Providence municipal ordinance, go to the Providence Code of Ordinances at http://library.municode.com/index.aspx?clientId=11458 and see Chapter 13, Article X, Division 2, Sections 13-213 through 13-217.
To read the Cranston municipal ordinance, go to the Cranston Code of Ordinances at http://library.municode.com/index.aspx?clientId=16303 and see Title 8, Sections 8.49.010 through 8.49.050.
To read the Warwick municipal ordinance, go to the Warwick Code of Ordinances at http://library.municode.com/index.aspx?clientId=11200 and see Chapter 10, Article V, Sections 10-36 through 10-40.
To read the Warren municipal ordinance, go to the Warren Code of Ordinances at http://library.municode.com/index.aspx?clientId=11976 and see Chapter 4, Article IX, Section 4-197.