Mediation Programs Failing to Help People Facing Foreclosure Save Their Homes

From mid 2008 to mid 2009 25 different foreclosure mediation programs have been established in 14 different states. State legislatures, state supreme courts and local courts created these.

The purpose of these mediation programs is to bring a representative from the mortgage company, a person facing foreclosure and a mediator together. These three parties explore whether the foreclosure can be avoided by modifying the person’s mortgage. If it can, then a new monthly payment is negotiated and the mortgage is modified.

The representative from the mortgage company is supposed to have the power to negotiate the reduced payment. When the modification agreed to is sent to the mortgage company, they are to automatically accept it and put in place.

Sounds great, doesn’t it? What have the results of these mediation programs been?

Mediation Programs Have Not Achieved the Results Expected

As of November of 2009 there is no data to confirm that any of the mediation programs have led to a substantial number of affordable and sustainable loan modifications.

  • Most have not had the cooperation from the mortgage companies that they expected.
  • People facing foreclosure have not participated in the mediation process.
  • Many of the programs gave the mortgage company the power to determine whether or not they would modify an individual loan.
  • Mortgage companies have reneged on the agreements to modify loans made by their representatives as part of the mediation process.
  • Programs have not tracked the outcome of the loan modifications that were agreed to during the negotiations. Those that have tracked the outcomes frequently have done it only under the vaguest of categories. These typically show that the program is doing a good job. The tracking is not specific enough to show whether or not most people have been able to save their homes from foreclosure with modifications.

Any time a foreclosure is finalized, it is done so at a tremendous cost. There are several different losers. The first is the family that owned the home. The second is the investor or investors who put up the money for the loan. The third is the community where the home is. Property values drop. The fourth are ordinary people who pay increased costs for loans and other things.

The concept of mediation programs is great. Again that is to bring together all parties involved in a foreclosure together to see if there is some way the loan can be modified and the people can save their home. If this can be done the loss for the investor or investors won’t be as great.

What can be done to improve the results of mediation programs?

Each mediation program has to be reviewed. The following guidelines should be in place for every mediation program:

  • Mortgage Companies must be required to participate in the program. Penalties need to be established for any that does not. A company that does not participate has to pay the penalty.
  • Each mortgage company has to give the person facing foreclosure and their representative, it they are represented, copies of certain documents related to the foreclosure. If the company has a proposal for a loan modification, they have to furnish this along with the data showing how they developed the proposal.
  • Each mortgage company should negotiate in good faith. Any that does not should have to pay a penalty.
  • The representative of the mortgage company must have the power to negotiate a loan modification for the company. Any time a company fails to honor a modification that has been agreed to by their representative, they should be penalized.
  • Every person facing foreclosure should be required to participate in the mediation process.
  • If participation in a given program is not mandatory, then anyone facing foreclosure should have to the right to request mediation on their case right up to the date on which a foreclosure sale has been scheduled.
  • Each mediation program should track the outcome of all cases where mediation has resulted in a loan modification. They should require the mortgage company to report to them on a monthly basis whether or not a person whose loan was modified has continued to make their reduced payment on time. In each case where the person did not make their payment on time and faces foreclosure again, the mediation program should investigate to find out what happened.

Properly structured mediation programs can be the most effective way to modify loans successfully which will enable as many people as possible to save their homes and which will help investors save their investments. Hopefully the state legislatures, state supreme courts and local courts that have set up the existing 25 mediation programs will take a long, hard look at each one and make the changes necessary for them to become as effective as possible.

Nevada – The Foreclosure Mediation Program

If you are facing foreclosure on your home in Nevada and a notice of default has been filed on your home, you may be able to get help through The Foreclosure Mediation Program (FMP).

The Foreclosure Mediation Program was established as a result of Assembly Bill 149, which was passed during the 2009 Nevada Legislative session. The program is a process where a neutral third party (the mediator) is assigned by the State of Nevada Mediation Administrator who will schedule a meeting between the Homeowner(s) and Lender in an attempt to negotiate an alternative to foreclosure. The program is only available on homes that are owner-occupied. However, if you do elect to participate in the mediation program, participation by your lender is mandatory and your lender must act in good faith during the mediation.

In order to execute your right for mediation, you must send by certified mail, a completed Election of Mediation Form and a $200 fee to the trustee as well a copy of the completed form to the Mediation Administrator no later then 30 days after the Notice of Default and the Election/Waiver of Mediation form is mailed to you by your lender. The lender must mail these documents to you within 10 days of filing the Notice of Default and Election to Sell at the County Recorder’s Office. If you are unsure if a Notice of Default has been filed, a simple search can be done to find out.

Once your Election of Mediation Form is received, the Trustee must send the form along with $400 ($200 from the property owner, and $200 from the lender) by money order or cashier’s check to initiate the mediation process. The FMP Administrator will then assign a Mediator to the file within 10 days of receiving the form and the $400. Mediations must be concluded within 90 days of the date the Notice of Default was recorded.

At the mediation, both the homeowner and the lender shall submit to the mediator a confidential nonbinding proposal for resolving the foreclosure. The lender shall also provide the evaluative methodology used in determining the eligibility of the homeowner for a loan modification. The Lender will also need to bring the following to mediation: the original or certified copy of the deed of trust, the original or certified copy of the mortgage note, and the original or certified copy of each assignment of the deed of trust and mortgage note.

Employment Mediation Explained

Whether you are an employer or an employee, there will be times when the process of having employees or being employed do not go as smoothly as planned. You may find that despite your best efforts you have been unable to resolve your issues and you both feel that you need an independent third party to assist you finding a resolution that you can both live with. This person is called a mediator and should be professionally qualified to conduct the mediation process.

A mediator should be well versed in employment law as well as mediation, their goal is to assist the parties with identifying the issues that have caused the problems and then to work through potential solutions through agreement. Mediators work with both parties to assist them with a successful resolution and mutual agreement in order for them to move on.

Your mediators role covers some of the following things:

Identify Issues

They assist the parties to express their real issues, both parties need to be able to clearly state which things are the problem and which are just a result of a bigger problem. This can happen sometimes when the problems have been ongoing and both parties have let one problem snowball.

Encourage Solutions

They’ll encourage both parties to offer solutions to each of the issues that have been raised, in effect starting the resolution process by getting them to offer ideas that could form part of the final agreement. This works well to assist the parties to see the others point of view.


When it may seem that a problem is insurmountable the mediator may be able to offer solutions that neither party had thought of in order to move them toward an agreeable result. They’ll assist the parties to stay on track when working through the process to ensure they don’t get caught up in the moment.


As the mediation processes your mediator will identify the resolution to the issues to form part of the final agreement. They’ll also make recommendations where appropriate, and when requested make a decision for the parties. Agreements are made in good faith, and the mediator will use a common sense approach to the resolution and agreement.


The mediator’s main role is to help both parties to resolve their issues, find resolution and agreement, and then move on. No employer wants unhappy staff and employees don’t want to work in an unhappy environment and when they can both find an amicable resolution to their issues, it’s a great result for everyone involved.