In mediation, the homeowner (the borrower), lender, and an impartial mediator come together with the goal of finding a way to avoid foreclosure. While participating in mediation doesn’t guarantee a particular outcome, you might be able to work out a way to keep your home or find a way to exit the property gracefully.
Read on to learn about Delaware’s Automatic Foreclosure Mediation Program.
Mediation, in general, is a form of alternative dispute resolution. In foreclosure mediation, the borrower and foreclosing lender work cooperatively—with the help of a neutral mediator who facilitates the process—to resolve the mortgage delinquency.
At the mediation, the parties discuss the borrower’s financial situation and various options to avoid foreclosure. Potential outcomes include:
Under Delaware law, most borrowers going through foreclosure qualify for mediation.
Eligibility. The borrower is automatically assigned to foreclosure mediation if the mortgage is on a one- to four-unit home, and the home is the borrower's primary residence.
Notification about mediation. Delaware foreclosures are judicial, which means the lender has to file a lawsuit in state court to foreclose. The lender starts the suit by filing what’s called a “complaint” with the court and serving a copy on the borrower, along with a summons to appear in court. The lender also serves a mediation notice with the complaint and summons that informs the borrower about the Automatic Residential Mortgage Foreclosure Mediation Program.
Steps the borrower must take. Within 30 days from the date the notice was served, the borrower must:
Borrowers who don't certify their intent to participate in mediation may still attend the scheduled mediation conference and meet with the lender's representative. But the mediation is less likely to be successful and the lender may seek a foreclosure judgment immediately after mediation.
Mediation scheduling notice. The court will then issue a mediation scheduling notice to the borrower and lender. The mediation scheduling notice will inform the parties of:
Required documentation. At least 14 days before the mediation conference, the borrower has to provide a financial proposal worksheet to the lender, mediator, and any other entities the court requires. The HUD-approved housing counselor will help you prepare this proposal. The borrower also has to bring certain documentation to the mediation conference. The lender will let you know which items you need to bring.
At the conference. The mediator will oversee the mediation conference and provide guidance as appropriate.
The lender can’t get a judgment of foreclosure until after the mediation date.
Mediation is free for the borrower. The lender has to pay a fee to cover the costs of the program.
Delaware’s foreclosure mediation program is scheduled to run until January 18, 2020.
Even though participating in foreclosure mediation might not help you avoid a foreclosure, it doesn't hurt to attend the meeting. The lender could be more likely to agree to a nonforeclosure solution, you might qualify for a loss mitigation option (foreclosure alternative) that you hadn’t previously considered, or you might buy yourself some extra time to remain in the home.
Whether or not you participate in mediation, you may work with your loan servicer (acting on behalf of the lender) directly to try to work out a foreclosure alternative. Federal law, in fact, requires servicers in most cases to contact borrowers who are behind in their payments to inform them about loss mitigation options. (Get an overview of federal laws that protect homeowners in the foreclosure process.)
But borrowers sometimes find that lenders and servicers aren’t helpful in the loss mitigation process. Meditation is another tool that you may use to try to come to a resolution with the lender.
For more information on Delaware’s foreclosure mediation program, go to the Delaware Department of Justice website. If you want to read Delaware’s foreclosure mediation law for yourself, see Del. Code Ann. Tit. 10 § 5062C.
Be aware that mediation does not suspend your obligation to respond to the foreclosure complaint (if you want to respond). To get information about how to respond to the complaint or if you want representation in the mediation or foreclosure, consider talking to a local foreclosure attorney.
To learn more about foreclosure alternatives, talk you your HUD-approved housing counselor. To find a counselor, go to the U.S. Department of Housing and Urban Development website.