What is mediation and how does it work in foreclosure cases?
Mediation is a process of guided negotiations. A neutral individual,
called a mediator, works with the parties to a mortgage, with or without
attorneys, in a discussion of the problem they have. The talks are
an effort to resolve the problem with the mortgage by mutual agreement
before it reaches court, default judgment, or foreclosure sale. The
mediator has no authority to make a decision. The mediator serves
as a discussion leader to help the participants negotiate more efficiently,
and, hopefully, reach an agreement sooner than they could on their
own.
What is a mediator?
A mediator is an independent, trained neutral, who works like a diplomat
to help people settle disputes. A mediator does not have to be but
is frequently an attorney. Harold Paddock has been an attorney for
over 34 years. However, even when the mediator is an attorney, they
cannot give legal or financial advice to either side.
Why should I bother to mediate my mortgage
problem?
Many difficulties with mortgages, either before suit is filed (such
as when a ARM reset is approaching or when a homeowner is slightly
behind in payments) or while a foreclosure case is pending, can be
resolved through reasonable discussions. An experienced mediator can
help the parties find a creative solution that they may have overlooked.
Because mortgage lenders don’t want to own houses, they are
generally willing to talk with a borrower about reasonable, practical
solutions to bring the mortgage current. Mediation, with the chance
to talk privately with the mediator, has a better opportunity to reach
a resolution than a possibly tense or difficult one-on-one negotiation.
And some lenders are willing to pay 100% of the mediator’s fee.
What is pre-suit mediation, and why is
it beneficial?
Pre-suit mediation is any mediation conference that occurs before
a suit is filed in court. In effect, a legal problem is nipped in
the bud before it becomes a lawsuit. Once a case is filed, the existence
of that litigation is public record and any individual can look at
the court’s case file or online records, and learn important
information about the parties. Credit reporting services monitor court
records and note the filing of a foreclosure suit as a black mark
on an individual’s credit rating. Mediating pre-suit avoids
the existence of a public record, saves everyone the expense of hiring
attorneys, and solves a problem (such as being somewhat behind on
a mortgage) before the passage of time makes the problem much worst.
How is mediation different than some of
these “debt relief” services I see advertised?
Many debt relief services are actually scams where the “service”
charges you a hefty monthly fee, but provides little or nothing in
return. No “debt relief service” is going to pay your
mortgage for you or reduce your monthly payments. However, the mediation
of a foreclosure problem gives everyone, the lender and the borrower,
the chance to talk candidly and openly about the current problem with
the mortgage, and look for a long-term solution that satisfies everyone.
Perhaps the loan can be extended, the interest rate amended by agreement,
or a homeowner given more time to catch up on overdue payments. A
mediation leads to an agreement that both sides find fair and workable
going forward. The mediator charges only for the hours worked toward
that solution.
Will the mediator issue a decision in my
case?
No. All the mediator can do is help the parties and attorneys look
at the dispute more objectively, discuss various options for a workout
of the mortgage, listen to each side privately, and assist the participants
in finding a mutually acceptable solution. A mediator makes no decision,
judgment, or recommendation on the outcome of the mortgage dispute.
What can a mediator tell a judge?
Next to nothing. The mediator can only tell the court (if a case is
already pending) whether or not the case settled. Discussions in mediation
are inadmissible at trial under Evidence Rule 408 and the Uniform
Mediation Act as adopted in Ohio. Even if a lawsuit is filed after
mediation fails to reach a settlement, the mediator is still subject
to the obligation to disclose nothing about the mediation discussions.
Should I bring witnesses and exhibits to
the mediation?
No. A mediation is not like a trial or arbitration. While the attorneys,
parties, and the mediator will discuss the situation, there are no
witnesses, no testimony, no exhibits, no objections, no cross examination,
and no arguments. You may bring documents that relate to and explain
the situation surrounding your mortgage and your financial circumstances.
Will I be expected to testify?
No. Because mediation is a focused negotiation process, the mediator
uses a conference room, but everyone sits at the table as equals in
a discussion format. There is no witness stand and no testimony. You
will be expected to listen, participate in the discussions as appropriate,
and make decisions about how to negotiate, and whether or not to settle.
Can the mediator tell me how to handle
my case?
No. The mediator is not there as a judge, jury, or arbitrator of the
case, or as an advocate or advisor for either side. It is important
that you analyze and reasonably evaluate your own financial situation
and the benefits of working out possible new terms for a mortgage.
The mediator may point out certain problems to each side, but this
is just part of looking at the case objectively. The mediator, the
attorneys, and the parties will also discuss the costs and drawbacks
of going forward with foreclosure litigation as compared to the benefits
of settlement.
Will the other side be there?
Generally yes. A representative of the mortgage lender, with authority
to settle, and the current property owner(s) should be at the conference
and prepared to negotiate. During the course of the mediation, the
mediator can and usually will meet separately with each side for private,
more candid discussions.
Can I bring my attorney to the mediation?
Yes. Under the Uniform Mediation Act, a party in mediation can bring
their attorney or any other support person that they want to the conference.
What if I just want to give up the house
and walk away?
Giving up your house in the face of
a foreclosure case is a serious decision and one that should not be
made lightly. Returning the ownership of a mortgaged property to the
lender is called “a deed in lieu of foreclosure”. The
parties to a foreclosure can still mediate about such issues as when
is the house to be turned over, when does the family have to move
out, and what other money obligations can be negotiated as part of
the deed in lieu of foreclosure.
I want my day in court. Why should I settle?
Every citizen has a right to seek a fair hearing in court, but you
should consider that a trial is not the only legal choice available.
Foreclosure cases rarely, if ever, go to trial. Almost always, the
judge decides a foreclosure case based on written motions filed by
the lender with the court. Each side should thoroughly discuss every
factor in the current situation before making the important choice
to settle with new terms or go to a foreclosure proceeding. Mediation
is an opportunity for both sides of a case to explore settlement possibilities
without risk or penalty, and with the aid of a trained mediator.
What happens if we can’t settle?
If the parties cannot settle at the mediation, several things might
happen. The parties or attorneys may agree to negotiate further later
on, or the mediator can schedule a follow-up mediation. Or the case
could ultimately go forward in court. There is no penalty or extra
cost for using mediation beyond the mediator’s fee.
Why should I mediate with Harold Paddock?
Mr. Paddock has over 25 years of experience and training as a mediator.
He retired as a Magistrate in 2003 after 27 years of service with
the Franklin County Common Pleas Court, General Division, the local
court that handles foreclosures. His office in north Columbus offers
the parties a convenient neutral location for their discussions. Mr.
Paddock can provide prompt scheduling of conferences, and can mediate
mortgage problems before suit is filed, or while a case is pending
in any Ohio court. Lenders can benefit from mediating with Mr. Paddock,
who can schedule several cases back-to-back in one or more days for
efficiency.
