Some states, like Nevada, offer homeowners who are facing a foreclosure the opportunity to participate in a foreclosure mediation program. In general terms, "mediation" is a form of alternative dispute resolution. Foreclosure mediation, specifically, is a process in which a homeowner, the loan servicer (on the lender's behalf), and a neutral mediator get together to try to work out a loss mitigation option, like a loan modification, and avoid foreclosure. Participating in mediation doesn't guarantee you'll be able to prevent a foreclosure, but you might be able to figure out a way to keep your home or exit the property, like by completing a short sale or deed in lieu of foreclosure, under terms you can live with.
While Nevada's mediation law was initially supposed to be temporary to help resolve the foreclosure crisis that occurred around 2007-2010, the state legislature has made the program permanent. Under state law, borrowers in foreclosure who live in Nevada get the option to participate in mediation if the property is owner-occupied.
Most Nevada foreclosures are "nonjudicial," which means the lender doesn't have to go through state court to foreclose. As part of a Nevada nonjudicial foreclosure, the lender has to offer you the opportunity to attend mediation to explore alternatives to foreclosure.
Sometimes, foreclosures in Nevada are judicial (through the court system) rather than nonjudicial. When Nevada's mediation law was first implemented, homeowners in judicial foreclosures didn't get the right to participate in mediation. But Nevada's Homeowner's Bill of Rights, which was passed in 2013, expanded the mediation program to homeowners in judicial foreclosures. (Foreclosure Mediation Rules, Rule 9).
In a Nevada foreclosure mediation, the borrower, the lender (or the servicer on behalf of the lender), and a mediator attend a meeting to discuss ways to avoid a foreclosure. First, though, you'll have to participate in a document conference call. When you attend the conference call, pay close attention to what your lender says. The lender will let you know what documents they need from you. You'll then get some time to gather up the necessary paperwork, like your last two pay stubs, tax returns, bank statements, utility bills, a hardship letter, and so on.
At the mediation, the mediator acts as a neutral facilitator. The parties discuss the borrower's finances and try to resolve the delinquency. The mediation might take place at a courthouse or at an office. Show up early and bring copies of all your documents. The mediation won't be longer than four hours.
Potential outcomes of mediation include:
If the mediation is successful and the parties agree on a way for the borrower to retain the home or exit the property in a manner other than through a foreclosure, then the foreclosure process stops. But if the parties can't reach an agreement, or if you waive your right to participate in the mediation program (see below), the foreclosure will continue.
Nevada law says that borrowers get the option to participate in mediation if the property is owner-occupied; the property can't be a timeshare, vacation home, second home, rental property, or another property where you don't live. (Nev. Rev. Stat. § 107.086). You must also meet some other criteria. Generally, you may participate in mediation once:
Even if you're not already behind in payments (called being in "default" on the loan), you may participate in mediation if a mortgage default is imminent and you have a documented financial hardship. Eligible hardships generally include the death of a co-borrower, serious illness, divorce or separation, a long-distance job transfer, job loss, a reduction in pay, or some other event that prevents you from repaying the loan.
But you aren't eligible for mediation if:
When a lender starts a foreclosure, it also provides the borrower with information on the foreclosure mediation program and how to apply for it. To opt into mediation, you have to file a Petition for Mediation Assistance with the court and serve it on the other parties to the case. You'll also have to pay a mediation fee, usually $250, plus a filing fee of around $25. If you can't afford the $25 filing fee, you can request a fee waiver. But you can't waive the $250 mediation fee. You must also submit a Civil Cover Sheet when you apply for mediation.
Briefly, here's what you need to do to participate in mediation, no matter what stage your foreclosure is in.
For a detailed description of each step you must take, see the Legal Aid Center of Southern Nevada's Foreclosure Mediation website. A lot of steps are required and the process can be confusing. If you need help applying for Nevada's foreclosure mediation program, consider hiring a local foreclosure attorney to help you complete all of the steps correctly and on time.
After you file your petition for mediation, a few different things could happen: The lender might decide to rescind the Notice of Default (nonjudicial foreclosures) or file a motion with the court to dismiss the case (judicial foreclosures) and, in exchange, ask you to cancel the mediation. (If this happens, consider talking to a lawyer to determine your best course of action.) Or the mediation process, as described above, might go forward.
Home Means Nevada, Inc., a state-affiliated nonprofit organization, provides resources and information on Nevada's foreclosure mediation program. This organization has also launched a COVID-19 response initiative to help financially distressed homeowners in Nevada. The initiative promotes home retention for Nevada residents struggling to make mortgage payments due to the coronavirus outbreak.
Home Means Nevada's The Homeowner Connect (THOC) system offers help to homeowners online. This web-based portal makes it easier for consumers to seek relief under various COVID-19 assistance programs by providing access to forbearances and other federal relief programs.
If you don't want to participate in the foreclosure mediation program, you must complete the State of Nevada Foreclosure Mediation Program Waiver. But in most cases, waiving mediation isn't a good idea. One study showed that homeowners who participate in mediation are more likely to avoid foreclosure than those who didn't.
While participating in Nevada's foreclosure mediation program doesn't force the lender to give you a foreclosure alternative, it doesn't hurt to go through the process. The lender could be more likely to agree to a nonforeclosure solution when you go through official mediation procedures, or you might qualify for a loss mitigation option that you hadn't previously considered.
Even if mediation doesn't help you avoid a foreclosure, it will likely buy you some extra time to remain in the home without making any payments.
Foreclosure mediators are typically trained in mediation and federal and state foreclosure laws, and also usually know about different community-based resources and mortgage assistance programs that could be available to help homeowners facing foreclosure. But they don't represent either party in the mediation process and they can't give legal advice.
So, while you don't have to hire a lawyer to represent you in your foreclosure mediation, it's often a good idea. A lawyer can give you legal advice specific to your situation and advocate on your behalf, helping you negotiate a way to avoid foreclosure. A lawyer will also ensure that your legal rights are protected in the process. And, if you're thinking about filing a response to the foreclosure, or any other motion with the court, consider talking to an attorney beforehand to discuss the consequences of doing so and your various options.
You might also consider consulting with a HUD-approved housing counselor to learn more about foreclosure avoidance options.
For more information on Nevada's mediation program, go to the Legal Aid Center of Southern Nevada's Foreclosure Mediation website. Also, see Senate Bill 490 and the Nevada Supreme Court Foreclosure Mediation Rules ADKT 435.