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How does foreclosure mediation work?

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Posted at 3:52 PM, Mar 08, 2018
and last updated 2018-03-08 18:52:18-05

This article is written by Peters and Associates.

 

Welcome to the second installment of “Ask An Attorney.” We’ve fielded several questions about Nevada foreclosure mediation options and bundled the most common here to answer for you.

What is foreclosure mediation?

Our state has two separate and distinct mediation programs to help struggling homeowners avoid foreclosure. Both share the same goal: to bring homeowners and lenders together in a confidential setting to discuss foreclosure alternatives, such as loan modifications, forbearance/repayment programs and short sales.

Foreclosure Mediation Program, through the state

The Foreclosure Mediation Program is great for homeowners who are in default on their mortgage payments and are facing a foreclosure notice, known as a notice of default. By the time a homeowner receives a foreclosure notice, he or she typically is months behind on payments and may even have tried unsuccessfully to negotiate a modification over the phone with the lender. With the Foreclosure Mediation Program, the homeowner and/or his or her attorney can negotiate with the lender and the lender’s attorney in person and bypass the frustration of phone conversations. In addition, the program requires lenders to produce original, or certified copies, of mortgage and deed documents. The only other way to force a lender to produce such documentation is to sue, which generally costs tens of thousands of dollars. The Foreclosure Modification Program fee is only $200, plus attorney costs for representation.

Mortgage Modification Mediation Program, Nevada Bankruptcy Court

The Mortgage Modification Mediation Program is beneficial for homeowners with debt besides a mortgage or for homeowners who would prefer not to wait until they receive a foreclosure notice before sitting down with the lender. If a homeowner has other unsecured debt or a second mortgage on the property, it may make more sense to use the Mortgage Modification Mediation Program to resolve his or her mortgage issues. Why? Because a bankruptcy may resolve all the debt issues — including the mortgage — in one forum: Bankruptcy Court. In addition, it could be easier and less costly for the homeowner.

Do these mediation programs work?

Yes. Each program has its pros and cons, but both generally have the same outcome: a mortgage payment that wasn’t affordable becomes affordable. A homeowner’s specific financial circumstances will dictate which program to select. But keep in mind, homeowners can elect into both programs, giving them two chances to work with lenders face-to-face. We strongly encourage all homeowners who are considering either program to consult with an attorney before getting started.

If you have a question you’d like to see answered by an attorney in a future issue, please write to us at questions@PandALawFirm.com.