From the Disputing Blog of Karl Bayer, Victoria VanBuren, and Holly Hayes.
Another United States jurisdiction has adopted a mediation process to address the ongoing foreclosure crisis. The District of Columbia (D.C.) Council approved the “Saving D.C. Homes from Foreclosure Act of 2010,” earlier this month. The measure requires lenders to participate in six months of mediation with a homeowner prior to foreclosure. According to the Washington Post:
Mediation allows the borrower and the lender’s representative to negotiate, with the guidance of an impartial go-between, over possible alternatives to a foreclosure, such as a loan modification. But neither side can be compelled to agree to a mediated solution.
The District Mayor signed the Act into law on Thursday. The new requirement, managed by D.C.’s Department of Insurance, Securities and Banking, will affect more than 3,000 homes currently in foreclosure. Unlike other jurisdictions, D.C. does not require the courts to review foreclosure cases. Consequently, the foreclosure process can proceed quite quickly.
Under the new law, a lender seeking to foreclose on a delinquent homeowner must notify the homeowner of the option to participate in mediation when a “Notice of Default” is sent. DS News magazine reports:
The borrower must opt to participate in the mediation process within 30 days of receiving the information in the mail, by returning the necessary forms and paying a $50 fee.
A mediation administrator will schedule a mediation session soon after the borrower opts into the program. The mediation session will be conducted by the administrator and the lender and borrower or their representatives must attend the meeting. The lender will be charged fines of $500 for missing the meeting or failing to bring required documents.
If the borrower misses the meeting, the matter will be terminated and lenders may proceed with the foreclosure.
D.C.’s new law follows closely behind a foreclosure mediation law implemented on July 1st in neighboring Maryland. Maryland’s law requires a lender pursuing foreclosure to send the homeowner a “Request for Mediation” form when it starts court proceedings. After that, “Homeowners have 15 days in which to file the request with the Circuit Court and must pay a non-refundable fee of $50.”