In response to the ongoing foreclosure crisis in this country, many states have implemented mediation programs to assist borrowers in finding ways to avoid foreclosure. If you are a homeowner facing foreclosure in Vermont, you may be eligible to participate in the state’s foreclosure mediation program. Read on to learn more about how the 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 borrower's financial situation and try to negotiate a way for the homeowner 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.)
Most foreclosures in Vermont are either by strict foreclosure or judicial sale, which means the lender has to go through state court to get one. (Learn more about the Vermont 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?)
Vermont law provides certain homeowners in foreclosure with the right to mediation. (Vt. Stat. Ann. tit. 12 § 4631, et seq.)
Originally, the Vermont mediation program only applied when the foreclosure action involved a loan that was subject to the federal Home Affordable Modification Program (HAMP) guidelines. (Learn more about HAMP.)
However, House Bill 431 (signed into law on April 26, 2013) made changes to the Vermont mediation program effective December 1, 2013. The act expanded the program to:
Vermont homeowners in foreclosure are eligible for mediation if:
The lender will serve notice to the homeowner along with the complaint and summons. The notice will:
The court will refer the case to mediation whenever the homeowner requests mediation prior to four months after judgment is entered (and before the end of the redemption period). However, the court may:
After the mediation is complete, the mediator must file a report within seven days. Once the court receives the report, it will determine whether the mortgage servicer complied with its obligations under the mediation statute. The court can impose sanctions, including stopping the foreclosure, if the court finds noncompliance with the mediation statutue.
The homeowner does not have to pay a fee to participate in the mediation program, but is responsible for his or her own costs, including the cost of an attorney, if represented, and travel costs, if any.
Even though participating in Vermont’s mediation program 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 mediation 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 on Vermont’s foreclosure mediation program, go to www.leg.state.vt.us/statutesmain.cfm and go to Title 12, Chapter 163, § 4631 et seq.