Foreclosure Mediation Program

Posted by kevin on March 23, 2013 under Foreclosure Blog | Comments are off for this article

New Jersey instituted a mediation program a few years back. The Courts claim that around 40% of the people who apply for mediation get some type of resolution. Now, resolution is a vague term and I do not know whether resolution = modification or can include short sales or deeds in lieu of foreclosure. In other words, I cannot vouch for the purported success rates claimed by the program.

That being said, two recent events impact on the mediation program. First, effective March 1, 2013, the program was de-funded. NJ was using some of its money from the $25 billion settlement to fund the mediation program. Those moneys have been used up, and not replaced by the Christie Administration. HUD counselors and ‘Free” attorneys for borrowers are no longer being paid so they stopped taking on new clients as of 2/28. My understanding is that mediators are still getting paid but that will end also. The judiciary wants lawyers to volunteer to be advocates for borrowers or mediators. One of the judges at the last Bench-Bar conference questioned how long the program will be available.

The second event is that the courts are setting time limits on applying to the program. Before, you could apply anytime before final judgment was entered. That could extend the foreclosure process for months. Now, a homeowner has 60 days from the service of the summons and complaint to file for mediation. After the 60 day period, you can get mediation only upon court order. If you read the prior blog, you will note that courts are clamping down on borrowers who are trying to set aside default judgments. The later you file your motion, the less the chance that the court will set aside the default judgment. You should expect the same treatment with getting orders to allow mediation after the 60 day window closes. In other words, the later you wait, the less likely the court will allow you to take advantage of mediation

What has not changed is that the mediation program is available to only homeowners who reside at the premises which can contain no more than three units.

What is interesting is that the federal HAMP program, as a result of the $25 billion settlement, does not allow a lender/servicer to go forward with a sale or start a foreclosure if the borrower has asked for a modification until a decision has been reached as to whether a modification will be granted. That is called double tracking. However, NJ does not seem to have any problem with double tracking since the mediation notice specifically states that a request for mediation will not stop the progress of the foreclosure action.