The Need for a Professional at Foreclosure Mediation

Cogburn Law
Madeleine Jones
July 29, 2013

After attending numerous mediations throughout the course of this year, it is still apparent that homeowners are at a severe disadvantage when going up against the bank during foreclosure mediation.  New mediation rules went into effect on January 1, 2013 that were supposed to make it more likely to come to an agreement at mediation but there are still many technical aspects of mediation that make it difficult for an ordinary homeowner to be on equal footing with the lender.    For example, I recently attended mediation for a homeowner where the lender denied a modification that the homeowner clearly qualified for.  The problem for the average homeowner is that the lender’s denials are extremely vague, such as, “after review it has been determined that homeowner fails the affordability test”.  If you don’t know what they mean by “affordability test” it will be very difficult to challenge.

It is important to get specific reasoning as to why a modification is denied because quite often,  as in my recent experience, the lender makes significant mistakes in their calculations. They may not calculate income correctly, they may miss significant expenses or may just have made an error inputting information in their computer system.  All of these issues can be brought up as arguments during mediation or prior to but these mistakes are not always obvious.  An important tip to remember is that in every instance of a modification denial, the lender is required to provide a written reasoning.  Additionally, for all HAMP reviews, the lender must provide the inputs that they used when calculating the modification in their system called NPV or Net Present Value.

Armed with the written reasoning of a denial and NPV results, you have the ability to challenge the lenders calculations and have a much better chance at success during mediation.  Every homeowner can certainly attend mediation on their own behalf and work through these issues without representation, however, a law firm that is well experienced with the issues that could arise in mediation as well as knowing all the modification and short sale guidelines makes your fight much more likely to succeed.  Your lender will be represented by an attorney and you should be as well.

The rules that the lenders must follow to attend mediation are very technical and if they don’t follow all of the rules, they are not allowed to foreclose.  I see errors about 20-30% of the time during mediation which means foreclose cannot proceed.  However, if you don’t know that the lender is breaking the rules, you may unfortunately be out of luck.

As a final tip, make sure all of your documents are submitted on time.  Timely submission of all your paperwork allows you to push back when your lender has failed to review your file on time. 


If you have additional questions or concerns, contact Cogburn Law Offices today. We can help.