Mediation Slideshow - Chicago Volunteer Legal Services

Circuit Court of Cook County Mortgage
Foreclosure Mediation Program
Homeowner’s Attorney Training
Eric Sutton
Supervising Attorney, Foreclosure
Mediation Program
CVLS Contact Information
Patricia Nelson, Director of Foreclosure Mediation Program
312-332-5539; [email protected]
Eric Sutton, Supervising Attorney
312-332-8239; [email protected]
Allegra Fischer, Staff Attorney
312-332-1687; [email protected]
Ashley Griffith, Staff Attorney
312-332-1916; [email protected]
Keri Lindsay, Staff Attorney
312-332-6434; [email protected]
Daniel Santrella, Foreclosure Mediation Administrator
312-332-7546; [email protected]
Matthew Maliawco, Foreclosure Mediation Paralegal
312-332-7546; [email protected]
Chicago Volunteer Legal Services
– Funded in 1964
– Over 2,900 volunteers
– In 2011, CVLS provided free legal services to 18,577 low income
people in the Chicago area
– Work from a small staff – leverage resources with volunteers
– Our job is to support YOU so that you have a good volunteer
experience and in turn our clients get excellent quality
2 Possible Components to CVLS
assistance for homeowners
- CVLS is automatically appointed by the court, and we accept
all cases
- no income caps
- just for mediation – no court or litigation
2. Access to Justice
- Court appointed by the Chancery Division
- CVLS income caps apply – we do not accept every case
- Full legal representation for litigation
- Possible representation for foreclosure cases that do not settle
in mediation
General Program Info
- Program Participants
- Circuit Court of Cook County
- Center for Conflict Resolution (CCR)
- Chicago Legal Clinic (CLC)
- Illinois Housing Development Authority (IHDA)
- Funded by Cook County Board through the Chicago Bar
- Began with cases filed after April 11, 2010
- Can be granted for cases filed prior but borrower won’t
automatically have the information to enter the program
Who is eligible to participate in
the program?
- No income caps
- Defendant must live in the property
- Single family home or building with 4 or less
- Should have an Appearance and Answer filed
- Must have met with an HUD-approved housing
Court Process for Mediation
• Opt in program – not automatic – tries to ensure you have engaged
• Summons w/ Hotline Number: 877-895-2444
• HUD Counselor – provided by IHDA
- Retention v Relinquishment Counseling
- Assist with Modification Applications or other document submission
• Volunteer Attorney – provided by CLC
- Screens for basic legal issues
- Assists in filing Appearance and Answer
- Motion for Mediation or Access to Justice Attorney – homeowner
presents motion themselves – at judge’s discretion
Court Process for Mediation:
Case Managers
• Case Managers assigned to each case management call.
• Court officers, and will not provide legal advice.
• Court refers Defendants interested in negotiating settlement to Case
• Case Manager oversees communications between parties
• Court decides whether to refer case to mediation based in part on
Case Manager report
Court Process for Mediation
• Mediation Referral Order
- Mediation issues are primarily pursuant to Order
- Plaintiff and Client contact information
- Post-Mediation status date – you are not required to attend – talk to
your support attorney if you think it’s necessary
• Notice of Mediation from CCR
- Dates & Times of Mediations
- 45 days before mediation – plaintiff to send payoff and
reinstatement, and status of current loss mitigation
- 10 Day Summary & Updated Financials
Default Foreclosure Timeline
January –
Pre-Complaint: 3 missed
Complaint: Filed
Late April
Jurisdiction: Service
Case Mgmt Date: No
Appearance filed
Motion for Default
Judgment entered
Sale: No notice if default
Sale Confirmed: OP
stayed for 30 days
Contested Foreclosure Timeline
January –
Pre-Complaint: 3 missed
Complaint: Filed
Late April
Jurisdiction: Service
Case Mgmt Date: No
Appearance filed
Motion for Default
Judgment: Borrower
appears and requests time
to file Appearance &
Answer. Judge grants 30
Contested Foreclosure Timeline
Borrower files Appearance
& Answer
Late August Borrower issues Discovery
to Lender
Late April
Jurisdiction: Service
Lender partially responds
to Discovery
Borrower sends 201(k)
Lender complies w/
Contested Foreclosure Timeline
Motion for Summary
Judgment: Borrower
requests Briefing Schedule
(28 days to Respond, 14
to Reply) and Hearing
Summary Judgment
entered – sale cannot
take place for 90 days
Confirmation of Sale, OP
stayed for 30 days
Borrower must relinquish
possession of property
What are we mediating?
• 2 categories of resolution
– Retention
– Relinquishment
• Overall goals
– Ensuring adherence to government programs
– Ensuring an end to endless submission of documents
- Ensuring fair treatment and no bullying
Retention Options
Borrower Remains in the Property
HAMP Loan Modification
Non-HAMP Loan Modification
Chapter 13 Bankruptcy
Hardest Hit Funds
What is HAMP?
• Home Affordable Modification Program (Making Home
Affordable - MHA)
• Servicers get monetary incentives for modifications made
under the plan
• Participating servicers supposed to screen everybody,
subject only to investor limits
• Those servicers receiving ongoing TARP money must
modify loans under HAMP
Where is there Guidance?
• No regulations or statute
• Guidance
– Previously - Non-Fannie and Freddie: Supplemental Directives
(SD), Model Forms & FAQs (
– Now – MHA Handbook (found at
• Supercedes SD’s and FAQ’s
• Except – provisions not incorporated in handbook – SD still applies
– Fannie Mae: Announcements (
– Freddie Mac: Bulletins (
FHA: previously - Mortgagee letters
» Now – incorporated in MHA Handbook
Other Helpful Resources
Binder of MHA handbook at mediation centers
If Binder is not in the room and you need it in
mediation, ask the receptionist – they are removed
every night
HAMP Basic Concepts
• Payments reduced to 31% of gross monthly income –
by reducing the interest rate, extending the term, and
possibly deferring or forgiving principal
• Modification results in a positive Net Present Value
(NPV) for investors
• Investors and servicers get financial incentives from
• Trial modification followed by permanent modification
Three Step Process
• Step 1 - Loan must be eligible
• Step 2 - Borrower must be eligible
• Step 3 - Borrower must qualify
– Waterfall Analysis
– NPV test
Step 1 – Loan Eligibility
• All Fannie Mae/Freddie Mac (GSE) loans covered – HAMP is
– Search engines online to see if either owns the loan
• Non-GSE loans – servicers, not investors choose to participate
– List with contact information available online
– Applies to operating subsidiaries/affiliates
– Servicer Participation Agreement (SPA) available online –
Step 1 – Loan Eligibility
Can Investors Forbid HAMP mods?
– If investor forbids modification, servicer must request waiver
– Supp. Dir. 09-01: servicers required to use “reasonable efforts”
to get approval
- Supp. Dir. 10-02: servicers required to provide list to Treasury of
investors not participating in HAMP and to contact each in
writing at least 1x to encourage participation
- Push back on this issue – insist on seeing something in writing
that the servicer did towards reasonable efforts
- Ask for Pool ID number – it is possible to look at investor’s
pooling and service agreement online – SEC website (difficult to
- Possible confidentiality issues
- Option to escalate – see page 36 of HAMP Manual
Step 1 – Loan Eligibility
HAMP Tier 2
- Servicers have the option to sign
onto the expanded HAMP guidelines
- Eligibility may be determined on a
case-by-case basis
Step 2 – Borrower Eligibility
Income Eligibility
• Current monthly mortgage payment including
PITIA (principal, interest, taxes, insurance,
association fees) must be greater than 31% of
monthly gross income
• Servicers who deny because current payment is
<31% of gross income may not have included
association fees
Step 2 – Borrower Eligibility
Borrower in Bankruptcy
• As of June 1, 2010 – are eligible for HAMP
– Borrowers in an active chapter 7 or chapter 13
bankruptcy case must be considered for HAMP if the
borrower, borrower’s counsel or bankruptcy trustee
submits a request to the servicer.
– Borrowers may not be denied a permanent HAMP
modification on the basis of a bankruptcy filing.
Supp. Dir. 10-02
» BUT – filing BK puts an automatic stay on
the mediation
Step 2 – Borrower Eligibility
Loan Eligibility
• Loan must be:
– First lien originated on or before January 1, 2009
• Home equity loans eligible if loan is first or only lien on
– Unpaid principal balance cap
• 1 unit: $729,450
• 2 unit: $934,200
• 3 unit: $1,129,250
• 4 unit: $1,403,400
– Not previously modified under HAMP
Step 3 – Borrower Qualification
Target Payment = 31% of Gross Income
Income – what’s included?
– Can include income for non-borrower household members.
– Can include income for non-resident borrowers, so long as one borrower uses
property as primary residence.
– Net income gets multiplied by 125%
– Rental income gets multiplied by 75%
– Unemployment income is not eligible
– If self-employed, profit and loss statement without other documentation suffices
– Borrower DOES NOT have to disclose child support or alimony
Must be able to document monthly income
There is no income amount that is barred. However, a borrower’s income may be too
low or too high for a HAMP mod
– Too low and the borrower will fail the NPV test
– Too high and current payment may already be at or under 31%
Step 3 – Borrower Qualification
Waterfall Analysis
• Target payment – PITIA 31% of gross monthly income
• Waterfall Analysis
– Capitalize costs and arrearages (no late fees)
– Reduce interest rate – as low as 2%
– Amortization term extended to 40 years
– Principal deferral
– Alternative principal forgiveness if loan to value (LTV) is >115%
• Servicers will only take steps necessary to get payment to target
• Deferral is uncommon, although possible. Forgiveness is extremely
Step 3 – Borrower Qualification HAMP Tier 2
Basic requirements of Tier 1: origination date on or before January 1, 2009,
documented hardship, one to four-unit property, unpaid principal balance
limitations and not condemned.
The borrower is evaluated for HAMP Tier 1 following June 1, 2012 but fails to
satisfy the eligibility requirements for a HAMP Tier 1 modification or underwriting
requirements for a HAMP Tier 1 modification.
The borrower was evaluated for, but not offered, a HAMP modification prior to
June 1, 2012.
The borrower had a payment default on a HAMP Tier 1 trial period plan entered
into before or after June 1, 2012.
The borrower lost good standing under a HAMP Tier 1 permanent modification
entered into before or after June 1, 2012 and, at the time of evaluation for
HAMP Tier 2, at least 12 months have passed since the HAMP Tier 1
modification effective date or the borrower has experienced a change of
The mortgage is secured by a rental property (described below).
Step 3 – Borrower Qualification
Waterfall Analysis – Capitalizing Arrearages
• Principal debt will increase
• Capitalized arrearage includes:
– Past due principal and interest
– Escrow deficiencies/advances, though doesn’t have to be – lender
will have paid taxes
– Foreclosure costs
– Servicing fees: property inspections, credit report fee
• CANNOT include:
– Late fees: unpaid fees will be waived
– Additional modification fees: no charge for HAMP
Step 3 – Borrower Qualification
Waterfall Analysis – Interest Rate Reduction
• Reduced to as low as 2% for 5 years (to get to 31%)
• Can go lower, but incentives only paid down to 2%
• Increase at 1% after 5 years to lower of
– Freddie Mac rate
– Interest rate cap in note
• Once rate increases to cap, fixed for life of loan.
Step 3 – Borrower Qualification
Waterfall Analysis – Increase Term of Loan
• If interest rate reduced to 2% and
payment still not equal to or less than
31% of gross income, then increase term
of loan to 40 years
Step 3 – Borrower Qualification
Waterfall Analysis – Principal Forbearance or Reduction
• Forbearance (Deferral)
– Limited to 30% of unpaid principal balance or 100%
– Treated as non-interest bearing balloon payment
• Reduction:
– Required as of October 1, 2010
– Reduce principal if LTV is >115%
Step 3 – Borrower Qualification
Net Present Value (NPV) Test
• Measures the benefit to the investor of a loan mod
– Not servicer
– Not borrower
• Weighs
– Value of current payments
– Value and probability of Foreclosure
– Value of payments under a loan mod
– Probability of another foreclosure after loan mod
• Positive NPV test= HAMP loan mod
• Negative NPV test—still possible to have a loan mod, but unlikely to
qualify for HAMP.
Step 3 – Borrower Qualification
Net Present Value (NPV) Test
• HAMP NPV test not public
– In mediation, demand inputs – limited to some inputs
– If litigating, should demand entire NPV in discovery
– FDIC has comparable model online at
– MHA has just released NPV model 5.0, but that is also
not publicly available
• Servicers can generate their own NPV and use their own
numbers for required inputs
Step 3 – Borrower Qualification
Reasons for Failing NPV Test
• Current income stream on loan is high
– Small likelihood of default (high FICO, low LTV, current, low DTI)
• Foreclosure looks attractive
– High home value
– Chance of cure is high
• Mod looks risky
– Declining home prices
– High chance of redefault
• Mod doesn’t generate enough income
– Borrower’s income is so low that at 31%, the mod doesn’t
generate enough income
Step 3 – Borrower Qualification
HAMP Tier 2 Waterfall Analysis
– Step 1 – Capitalization. The servicer capitalizes
accrued interest, out-of-pocket escrow advances to
third parties, and any required escrow advances
– Step 2 - Interest Rate Adjustment. Fixed-rate based
on the weekly Freddie Mac Primary Mortgage Market
Survey (PMMS) Rate for 30-year fixed rate conforming
loans, rounded up to the nearest 0.125 percent plus a
risk adjustment expressed in basis points. In short,
possibly more than 2%.
Step 3 – Borrower Qualification
HAMP Tier 2 Waterfall Analysis (Cont.)
– Step 3- Term Extension. Extend to 480 months
– Step 4 - Principal Forbearance. If the loan’s premodification mark-to-market loan to value (LTV) ratio
is greater than 115 percent, NPV 5.0 calculates
principal forbearance in an amount equal to the lesser
of (i) an amount that would create a post-modification
mark-to-market LTV ratio of 115 percent using the
interest bearing principal balance or (ii) an amount
equal to 30 percent of the post-modified UPB of the
mortgage loan (inclusive of capitalized arrearages).
Unlike HAMP Tier 1 there is no excessive forbearance
limit in HAMP Tier 2.
Step 3 – Borrower Qualification
Additional Requirements
– post-modification debt-to-income ratio must not be
less than 25% or greater than 42%
– modified monthly P&I payment must represent a
reduction of at least 10 percent compared to the premodification monthly P&I payment in effect at the
time of consideration for HAMP Tier 2
– HAMP Tier 2 post-modification P&I payment is at least
10 percent less than the monthly P&I payment that
was payable under the HAMP Tier 1 trial period plan
Applying for HAMP
“Should” be done by HUD counselor, and you should receive a complete
package with your case
but some clients go to HUD counselors outside of the program
Some counselors aren’t as reliable as others (some are great)
Make contact with the HUD counselor one of the FIRST things you do
Ask plaintiff’s counsel if any other docs are needed the SECOND thing you do
Submission of “Initial Package” triggers servicer’s duty to review for HAMP
Regardless of the quality of the HAMP application from the counselor, you
will need to send
– 30 days most recent paystubs
– 2 months most recent bank statements
Documents need to be fairly current, or may be unusable (“staledated”)
Applying for HAMP
What needs to be in a HAMP application
Request for Modification (RMA)
Separate free form hardship letter, signed and dated by all borrowers
4506T – tax certification form
Last 2 years tax returns that have been filed
Dodd-Frank certificate
Proof of income
– 30 days-worth of most recent paystubs for W-2 income
– Lease, contribution letter, proof of deposits in bank statements
– Profit and loss statement for self-employed (don’t need back up docs)
Separate list of expenses – signed and dated
Sometimes a servicer specific application (ask plaintiff’s counsel)
Last 2 months bank statements – all pages, even if intentionally left blank,
for all accounts. Printouts of online activity reports are not accepted
» Recent utility bill – for proof of occupancy
• Forms are available at
Servicer Response Time
• 10 business days from receipt of Initial Package to
acknowledge borrower’s request in writing.
• 30 calendar days from receipt to approve, deny, or
request more information in writing
• If denied, 10 business days from determination to notify
of denial in writing.
• Doesn’t happen in real life – but can point it out in
Incomplete Information
If more information needed:
Servicer must send written request to borrower that identifies
specific information needed
Letter must allow 30 days to provide missing documents.
If still not returned, servicer must send 2nd letter giving
borrower 15 days to provide documents before denying
If still not provided, servicer will send Denial Notice that cites
denial due to insufficient information to determine eligibility
If requested in mediation – ALL documents should flow
through you directly to plaintiff’s attorney – do not
accept a request to send directly to the servicer
If Approved
• Trial Period Plan
– At least 3 months trial at proposed modified payment
– Arrears will accrue during trial. Payments are held in suspense
and only credited when equal to full monthly payment under
– Will be reported to credit bureaus as either in default or making
payments under a plan
• Will be converted to permanent modification upon completion of
trial modification – additional docs and/or meeting with a housing
counselor may be needed
• If fails trial period: no further HAMP mod. “1 bite at the apple.”
If Denied
• Written Notice must be sent to borrower within
10 days of determining HAMP modification
• Must state why homeowner was denied
• Must describe alternative loss mitigation options
• If due to NPV, must offer opportunity to request
NPV inputs
If Denied
• If denied based on NPV: notice will allow opportunity to
request certain inputs (e.g. income, UPB) in 30 days
(sale stayed)
• Servicer must provide inputs w/in 10 days of request
• Must review new borrower data, recalculate if likely to
change outcome
FHA Loans
• HAMP considered last modification tool for FHA loans, rather than
used as first option like Fannie/Freddie/non-GSE.
• Incentive payments now available for FHA-HAMP mods
– Includes principal reduction payments to borrowers
• Mortgagee letters available at
• Mortgagee Letter 09-23 sets forth basic outline
• Be aware of other modification options available for FHA mortgages
– See, e.g., Mortgagee Letter 09-35 (requiring that modifications
reduce the base rate to the current market rate)
Retention Option
Non HAMP, Traditional, In House Loan Modification
- Same Terms to Modify: Interest, Term, Principal
- Wise to use same Income Target: 31% of Gross… but
can vary
- Need to evaluate net income and actual expenses to
determine how much borrower can actually afford to
- Down payment: Anywhere from 20-50% of Arrearage
- Defer Arrearage as Balloon Payment
- Again, forgiveness is extremely rare
Retention Option
- Lender agrees to accept no (or reduced) payments for a specified
period of time
- Unemployed borrowers or those experiencing a temporary, finite
loss of income
- An option in mediation if all efforts towards loan modification fail
and borrower wants to continue to try
- Be sure to set time lines of what documents are required at the
end of the forbearance to then be considered for a loan
Retention Option
Repayment Plan and Reinstatement
– Repayment Plan
- Borrower pays arrearages (missed payments, attorney’s fees,
lender’s costs, taxes paid on their behalf) over a period of time,
usually 6-12 months
- Borrower must make regular mortgage payment in addition to
repayment amount
- Unrealistic for most borrowers
- Reinstatement
- borrower pays full arrearages – including missed payments,
attorney’s fees, lender’s costs, taxes paid on their behalf)
- realistic for some borrowers who borrow the money from 401(k)
Retention Option
Chapter 13 Bankruptcy
- Stays foreclosure if filed before the sale
- Borrower’s debt, including mortgage arrearages,
consolidated and borrower makes monthly payment to
- Borrower must make regular mortgage payment as well
- Last alternative – negative impact on credit
- Talk to your support attorney if this is an option
- CVLS has volunteer attorneys who can give advice and
represent on this issue
Retention Option
Hardest Hit Funds
- Borrower applies to Illinois Housing and Development
Agency (IHDA)
- Up to $25,000 available for no-interest loan
- Designed to assist when income decreases temporarily
- Can be used to reinstate and to assist with payments
- Only ripe for mediation when amount owed is right at
$25,000 mark.
Relinquishment Options
Borrower Surrenders Property
Deed in Lieu of Foreclosure
Consent Judgment
Short Sale
Relocation Assistance (“Cash for Keys”)
Relinquishment Option
Deed in Lieu of Foreclosure (DIL)
- Essentially short sale to the bank
- Borrower deeds property to lender and lender agrees
not to pursue personal deficiency
- Have to list property for 90 days first
- Why? Credit score, cannot reinstate, no equity
- Why not? Cook County judges rarely grant personal
deficiency judgments, less time in the property, credit
still negatively impacted
- Title issues will prevent – lender would take property
subject to other liens as opposed to foreclosure that
wipes them out
Relinquishment Option
Consent Judgment
- Similar to DIL except 2nd mortgage on property
– 2nd mortgagee bound if proper notice & does
not object
– 2nd mortgagee can later file a collection case
based on the Note even though mortgage
– Statute bars pursuit of personal deficiency
– Statute makes unavailable if there is a US tax
Relinquishment Option
Short Sale
- Sale price does not cover outstanding mortgage
- Approval required from all lienholders
- Amount forgiven IS taxable if investment property
- Need to get lender’s approval to waive personal
deficiency – not automatic
Relinquishment Option
HAMP Related Program HAFA
Homeowners can get $3000 for completing a short-sale
or DIL
Must meet basic HAMP eligibility requirements
– No NPV test
Must be evaluated for HAMP and fail or request HAFA
– If borrower requests HAFA, they must be informed of
HAMP and given 14 days to consider pursuing HAMP
Deficiency must be waived
Borrowers may be required to make monthly payments
of 31% of income
Supp. Dir. 09-09
Relinquishment Option
HAMP Related Program HAFA
• Minimum net proceeds defined in advance
• Minimum 120 days to sell the property under short sale
• Borrower supposed to clear subordinate liens; servicer
may authorize up to a total of $6K from sale proceeds
paid to subordinate lienholders, no more than 6% of the
subordinate lien’s outstanding principal balance
• Servicer may require borrower to list house first, before
entering into a deed-in-lieu
Relinquishment Option
Relocation Assistance (“Cash for Keys”)
Relocation Assistance (“Cash for Keys”)
- Possible part of DIL Agreement
- Lender pays Borrower to timely vacate home w/out
destroying property
- Lender avoids incurring eviction costs
Factors to Consider for Any Option
- compare length of time in the home with
agreement and without
- risk of deficiency judgment
- credit score impact
- alternate housing plan
- tax consequences
- relinquishment options RARELY make sense
Relocation Resources
• For Chicago:
- IL Department on Aging, 800-252-8966
- Chicago Dpt. on Aging, 312-744-4016
• For Suburban Cook County:
- Eldercare, 800-677-1116/
Relocation Resources
• Housing Prevention and Rapid Re-Housing
• City of Chicago residents only – 311
• Only if at or below 50% area median income
• Suburbs offer only if homeless
• Housing relocation
• Monetary assistance
Debt Forgiveness:
Tax Implications Whenever Principal is Forgiven / Reduced
• Mortgage Forgiveness Debt Relief Act
- If Primary Residence, then amount
forgiven is NOT taxable
- EXCEPT, if it was a refinance, any funds
taken out and not used on the property
ARE still taxable – even if primary
Debt Forgiveness:
Tax Implications
• Even if taxable, there is an exception
when the client is insolvent at the time of
the forgiveness
• IRS Publication 4681 & IRS News Release
IR-2008-17 for further details
• Refer to CVLS if tax advice is needed
What can you Expect from
– Sign up as volunteer, even if already CVLS vol
– Phone calls and / or emails requesting you to
take a case
– Agree to take a case, and receive documents
by email
– An experienced “support” attorney assigned to
your case who will keep in contact with you,
discuss the case, and possibly attend
mediation with you
What do you do when you
get a case?
• You will likely receive very few documents
– Notice of Mediation
– Mediation Referral Order
– Letters to you and the client
• Client Intake, Case Work up and Mediation Summary
• Working in a short time frame – get started
• Can meet with your client in person or by phone
• Mediation summaries due 10 days prior to mediation.
• Keep in touch with your support attorney
Can I cancel or continue a
• Highly frowned upon, but can be done if
necessary. Check with CVLS support attorney
• Must have opposing counsel’s agreement – email
them in advance for agreement
• After you have their agreement, email CCR at
[email protected]
to continue or cancel
• Must give CCR at least 72 hours notice.
What to bring to mediation
– Bring with you all documents that have been submitted
– Bring any updated documents you haven’t already
– Clients must appear
– Be prepared and on time
– Will last at most 90 minutes
– Assume second mediation will occur
What to Expect in Mediation
- The Plaintiff must attend, and can attend by speaker phone
- Policy Statement / Confidential
- Each side’s perspective and goals
- Mediator may directly ask the parties
- Plaintiff usually goes first
- Prep client – opportunity to be heard but focus on
settlement – speak for your client if they prefer
What to Expect in Mediation
- Mediator summarizes issues, looks for common ground
Focus on specifics
- which program the Plaintiff is working under vs. the
program the Plaintiff SHOULD be working under
- arrearage and pay-off figures
- borrower eligibility – income & expenses
- Do not be afraid to ask for clarity – most often you know more
than the person on the phone
- Do not take the servicer’s answer as gospel – make them run
through all of their calculations with you – challenge any errors
to their numbers or their process
What to Expect in Mediation
Often times – what docs are still needed
– If docs are to be submitted they should go through plaintiff’s attorney
– Set out a timeline for submission and responses – DO NOT ACCEPT
– Set an additional mediation date after the answer is expected – can be
cancelled if case settles
Get additional info so that you can refine your calculations before the next
– The most current Broker’s Price Opinion (BPO)
– Current unpaid principal balance, arrearages, total payoff
– Current escrow (taxes and insurance) being paid
– If any other docs will need to be updated before next mediation
– If any other docs will be needed to be evaluated for other programs if
the one applied for fails – go ahead and submit them now
What to Expect in Mediation
• If you need time to discuss something with your client –
take them out in the hall – no discussions should proceed
without your presence
• If you have a question – call your support attorney or any
CVLS attorney in the program
• If the post mediation status date is before the next
mediation, make sure plaintiff’s attorney agrees to have
the mediation order continued
• If an agreement is reached, the mediator will complete a
summary of agreement – often subject to underwriting
What to Expect in Mediation
Issues that probably shouldn’t be addressed
• “Robo Signing” – this is a summary
judgment issue
• Standing – “produce the note” – this is an
issue for litigation
• Assignment of note – attaching
assignments to the complaint is not
• Proper service - moot: borrower has filed
What to Expect in Mediation
Should I schedule another mediation session?
Always err on the side of “yes”
Even if you come to agreement, set another date to make sure it is
properly reduced to writing (it is your job to review the written
If the written agreement is satisfactory, you can cancel the
Plaintiff’s attorney may fight you on this issue – don’t worry, we can
go to the post mediation status date and ask the judge to continue
the mediation order
If you agree to any next steps, you should not sign anything that
states that there is “no agreement”
If there are any next steps, be sure to memorialize them in the
Summary of Agreement form that the mediator will provide
What to Expect in Mediation
What should I do if my client is in a trial modification?
• Cancel any mediation that is scheduled before the last
trial payment is due
• Request another mediation for immediately after the last
payment is due to mediate a permanent loan
modification – insist that this date be set
• Confirm that the plaintiff’s attorney will attend any
intervening post mediation status date and continue the
mediation order
• Touch base with your client and plaintiff’s counsel after
last payment is made to coordinate getting any required
updated documents submitted
What to Expect After Mediation
• You do not attend the 12 week post-mediation status date at court.
However, we highly encourage you to attend a call to understand
the procedures.
• Your client must attend – prepare them for what will happen – the
court considers attendance essential for demonstrating continued
• CVLS will provide the court a summary of what we are requesting /
what happened – very basic, cannot break confidentiality
• Either send case back to trial call, or extend mediation order
• IMPORTANT: Send written summary to support attorney after each
mediation session – we need to know what to report to the court
for the 12 week status date

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