In response to the foreclosure crisis, many states implemented mediation programs to assist borrowers in finding ways to avoid foreclosure. In January 2012, Delaware implemented an Automatic Foreclosure Mediation Program for residential properties. Read on to learn more about how Delaware’s foreclosure mediation 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 borrowers’ financial situation and try to negotiate a way for the borrowers 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 Delaware, foreclosures are judicial, which means the lender must file a lawsuit in state court. The lender initiates the foreclosure by filing a petition and having it served on the borrower, along with a summons to appear in court. Learn more about the Delaware 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?)
Delaware law provides mediation for residential properties that are in foreclosure (Del. Code Ann. Tit. 10 § 5062C). Homeowners are automatically assigned to mediation if:
Here are some details of the Automatic Residential Mortgage Foreclosure Mediation Program.
The lender will serve a notice to the homeowners along with the complaint and summons informing them of the Automatic Residential Mortgage Foreclosure Mediation Program. A Certificate of Participation form will be attached to the mediation notice.
No more than 30 days from the date the notice was served, the homeowners must:
What happens if I do not file the Certificate of Participation? If the homeowners do not certify their intent to participate in mediation, they may still attend the scheduled mediation conference and meet with a representative of the lender. However, the mediation is less likely to be successful and the lender may seek a foreclosure judgment immediately after mediation.
The court will issue a mediation scheduling notice to the homeowners and lender. The mediation scheduling notice will inform the parties of:
The mediation conference will be scheduled for a date that is not less than 45 days from the date the notice of foreclosure mediation was served on the homeowner (unless the homeowner gives written consent) and not more than 75 days from such date (unless both the homeowner and lender give written consent).
At least 14 days prior to the date of the mediation conference, the homeowners must provide:
At least seven days prior to the date of the mediation conference (or such other date as agreed to by the mediator), the lender must provide the homeowners and their housing counselor with:
Each party must be available at least three days prior to the date of the mediation conference to discuss the list of documents.
Failing to bring the required documentation to mediation can hurt the homeowners' chances of a workout. If the homeowners do not to bring the documents required by the lender to the mediation conference, the mediator will take that fact into consideration when making recommendations. Failing to provide documentation may affect the lender’s ability to offer a loss mitigation agreement or other resolution of the foreclosure.
The lender must bring to the mediation conference:
The homeowners must appear in person at the mediation conference. The housing counselor, as well as the homeowners’ attorney, may attend if the homeowners so choose. A representative of the lender must attend the mediation, however the lender’s attorney may appear instead of the lender’ representative, if:
The mediator will manage the mediation conference and provide guidance to the parties in the negotiations. However, if there are other mediation conferences occurring at the same time in the same location, the mediator may decide not to be present for the entire mediation session. In this scenario, the mediator will inform the parties that they may engage in party-led mediation and that they should find the mediator if questions arise and when the mediation conference is complete.
A judgment of foreclosure may not be entered until after the mediation date.
If the lender does not show up for mediation, the foreclosure may be dismissed. The mediator can recommend that the court dismiss a foreclosure action if the lender fails to appear for two successive mediation sessions.
After the session, the mediator and the parties sign a mediation record that states one of the following:
Mediation is free for the homeowners. The lender must pay a fee to cover the costs of the program.
Even though participating in Delaware’s mediation program does not guarantee that a foreclosure will be avoided, 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. And you might qualify for a loss mitigation option that you hadn’t previously considered. For more information on Delaware’s foreclosure mediation program, go to www.delawarehomeownerrelief.com and click on "Help for Homeowners" and then "Residential Mortgage Foreclosure Mediation Program."