In response to the ongoing foreclosure crisis in this country, many states have implemented mediation programs to assist homeowners in finding ways to avoid foreclosure. In 2013, Rhode Island implemented a statewide foreclosure mediation program. (The cities of Providence, Cranston, Warwick, as well as the town of Warren, in Rhode Island previously implemented mediation programs through municipal ordinances.)
Read on to learn more about how the Rhode Island statewide mediation program works, how it interacts with the foreclosure mediation ordinances in Providence, Cranston, Warwick, and Warren, and how you can benefit from the mediation 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. Mediation consists of a meeting between:
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 a:
Most foreclosures in Rhode Island are nonjudicial, which means the lender does not have to go through state court. (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.
Effective September 13, 2013, Rhode Island law requires lenders or their mortgage servicers or agents to give borrowers who are not more than 120 days delinquent the opportunity to participate in a foreclosure mediation conference.
To be eligible for a mediation conference, the property must be:
When a homeowner is no more than 120 days delinquent on his or her mortgage, he or she will receive notification by certified and first class mail from the lender or loan servicer that he or she has the right to participate in a foreclosure mediation conference.
Foreclosure proceeds if homeowner doesn't respond. If after two attempts, the homeowner fails to respond to the request to appear for the mediation 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 mediation coordinator.
The mediation conference will take place in person or over the phone no later than 60 days following the mailing of the notice. There is no cost for the homeowner to participate in the mediation conference.
If the parties cannot come to an agreement to avoid foreclosure at the mediation conference, the lender may proceed with the foreclosure (so long as it made a good faith effort to negotiate at the mediation conference).
If the homeowner and lender agree on a loan workout as a result of the mediation conference, but the homeowner defaults on his or her obligations under the agreement within 12 months, the lender does not have to participate in another mediation, but can proceed with foreclosure.
The statewide mediation program is currently set to sunset (end) on July 1, 2018, unless it is extended before then.
The cities of Providence, Cranston, Warwick, and the town of Warren implemented mediation programs through municipal ordinances. (Learn more in Nolo’s article Rhode Island Foreclosure Mediation Programs in Providence, Cranston, Warwick, and Warren.)
The statewide mediation program supersedes the municipal ordinances with one exception. An eligible homeowner who was more than 120 days delinquent at the time the new statewide program went into effect can apply for mediation under the applicable local ordinance.
Participating in a mediation conference does not guarantee you'll avoid foreclosure, but it won't hurt and might help. The lender may be more likely to agree to a nonforeclosure solution during a mediation 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.
To read the statute that implements Rhode Island’s statewide mediation program, go to the State of Rhode Island General Assembly’s webpage at www.rilin.state.ri.us. Click on “Legislation” and then “The State of Rhode Island General Laws.” Look in Title 34 (Property), Chapter 34-27 (Mortgage Foreclosure and Sale). The relevant statute is § 34-27-3.2