In January 2009, in response to unprecedented numbers of foreclosure filings, the Court launched a statewide interagency mortgage foreclosure mediation initiative. Its intent was to foster open and effective channels of communication between homeowners and lenders by introducing a neutral third party mediation process to assist lenders and defaulting homeowners in reaching satisfactory resolutions.
Over the past couple years, the program’s funding was reduced and its design was modified accordingly. The time to apply is significantly shorter. Homeowners must now apply for the mediation program within 60 days after the service of the summons and complaint. Thereafter, homeowners will only be allowed into the program by a judge after a motion on notice demonstrating exceptional circumstances exist.
This abbreviated window reinforces the need for public education. There are still high numbers of foreclosure filings. The great majority of homeowners do not request mediation. Program changes, including the discontinuance of program attorneys and housing counselors for homeowners, have led many consumers, and even attorneys, to mistakenly believe the foreclosure mediation program has been discontinued.
Foreclosure mediation, however, is still available as an option worth exploring. Homeowners are encouraged to reach out to the private bar, legal services, pro bono clinics and lawyer referral services for assistance within the process. Although not funded to participate in mediation, there are still some HUD approved housing counselors available who can assist homeowners with budgeting their expenses and sometimes in preparing documentation and completing modification requests.
The foreclosure mediation program has received mixed reviews. Some attribute complex underwriting guidelines and seemingly unending information exchange as impediments to creative and productive dialogue exchange. Despite its unique challenges, there is little debate that the foreclosure mediation program does connect homeowners and lender representatives so that a thorough review based on accurate information can be facilitated. These court sanctioned mediations provide homeowners with actual leverage to engage lenders in modification negotiations. Within a structured forum, information exchange is facilitated and documented. There is outcome data over the past couple years indicating that about 50% percentage of foreclosure cases are resolved within the foreclosure mediation program with some 40% of those homeowners receiving loan modifications.
The New Jersey Judiciary’s Foreclosure Mediation Program remains a viable lifeline to many NJ homeowners facing one of the most difficult of life’s challenges – the loss of a home and all the economic, social and emotional stability it provides. Everyone benefits when a practical resolution – a modification or even graceful exit sparing or easing the trauma of a sheriff’s sale – can be reached.