Attorney Frequently Asked Questions
What is the Foreclosure Diversion Program?
The Supreme Judicial Court has established the Foreclosure Diversion Program to assist lenders and homeowners in achieving mutually agreeable resolutions of mortgage foreclosure actions through the mediation process.
What Foreclosure cases qualify for the Foreclosure Diversion Program?
All mortgage foreclosure actions filed after December 31, 2009, against defendants who are owner-occupants of one- to- four family residential properties located in Maine qualify for the program if the property involved is the primary residence of the homeowner.
Additionally, courts may order foreclosure actions filed on or before December 31, 2009, to mediation if the action has not yet resulted in final judgment as of January 1, 2010, and the court makes certain findings specified in M.R.Civ. P. 93(q)(1).
Are foreclosure actions instituted by condominium associations to foreclose on liens established pursuant to 33 M.R.S. § 1603-116(a) eligible for mediation through the Foreclosure Diversion Program?
No. See December 1, 2010 Announcement for a more detailed explanation.
Is participation in the Foreclosure Diversion Program mandatory?
Participation is mandatory for any party filing a foreclosure action and plaintiff’s counsel. Homeowners do have the option to request waivers of mediation.
What information is required for the Foreclosure Diversion Program?
As mentioned above, the plaintiff/lender must provide certain financial forms/questionnaires to the defendant/homeowner at the time the complaint is served. The homeowner must complete and return copies of these forms to plaintiff's counsel and the court no later than 21 days after the informational session or 42 days after the service of the summons and complaint if no informational session is held. All of the information contained in these completed forms will be used by the plaintiff/lender to prepare any proposals for discussion during mediation. In addition, the mediation order will instruct parties about any other information they must provide, including specific inputs for the FDIC Net Present Value Tool used by the mediator. In advance of the mediation session, plaintiff/lenders will be required to complete and submit court form FDP-02A and defendant/homeowners will be required to complete and submit court form FDP-02B.
How do plaintiff/lenders complete "Section B" of court form FDP-02A?
Section "B" of court form FDP-02A requires plaintiff/lenders to produce 24 values that will be needed in order for the mediator to fully complete the FDIC Net Present Value (NPV) worksheet. Items 1-14 call for specific information about the loan and the property, whereas items 15-24 call for more general information. For example, these general information items include a value for "Home Price Appreciation Forecast" and "REO Stigma Discount." If the plaintiff has reliable information for items 15-24, plaintiff should provide that information. It is in plaintiff's best interest to have the FDIC NPV worksheet completed with values based upon plaintiff's actual experience. However, if the plaintiff does not have access to reliable information for these items, then plaintiff may rely upon the regional values collected by the Foreclosure Diversion Program from FDIC NPV worksheets used in actual foreclosure mediations.
Where can I find the regional survey of FDIC NPV values?
The regional survey of FDIC NPV values can be found here (FDIC REGIONAL SURVEY 7-10.pdf). Note that the values are organized by court location. Plaintiff should use the value applicable for the court in which mediation is to be held.
How would the homeowner become aware of the Foreclosure Diversion Program?
The lender is required to give information to the homeowner about the Foreclosure Diversion Program along with the complaint. In addition, the Judicial Branch website has information designed for homeowners, and the Bureau of Consumer Credit Protection has created an awareness campaign.
What happens if the notice and other required documents are not served on the homeowner with the complaint?
The court may issue an order dismissing the action or imposing other sanctions as appropriate.
Does participation in the Foreclosure Diversion Program stay the foreclosure action?
Participation in the Foreclosure Diversion Program does not suspend the homeowner’s obligation to respond to the foreclosure action. However, once a homeowner appears, answers, or otherwise requests mediation within 20 days after service of the summons and complaint, or when mediation is ordered by the court, no dispositive motions or requests for admissions shall be filed until 5 days after the mediation is completed and a final mediator’s report is filed with the court, or until the court orders that mediation shall not occur.
How long is the mediation period?
The mediation period begins when the court sends an order scheduling mediation. Unless the parties agree to an extension, or the court orders an extension after finding that plaintiff’s delay requires an extension, the mediation period will end within 90 days after the order is sent.
When will the mediation session be held?
Before mediation is scheduled, the homeowner will be required to attend (and the lender will be notified of) an informational session designed to educate the homeowner about the documents that will be required for mediation, the community resources available to homeowners, and what to expect in mediation. Once the homeowner has attended that informational session, the mediation session will be scheduled.
Mediations will typically be scheduled no sooner than 6 weeks following an informational session, to accommodate the 21 days the homeowner has to return the completed financial forms to plaintiff’s counsel, and then another 21 days the plaintiff has to consider this information.
When a homeowner is not required to attend an informational session, the homeowner has 42 days after service of the complaint and summons to return the completed forms to plaintiff’s counsel. Plaintiff then has 21 days to consider this information.
Where will mediations be held?
Whenever possible, mediations will be held at courthouses. However, if courthouse resources cannot accommodate the mediation session, or the parties and mediator agree in advance on an alternate location, other sites are possible. Note that mediation may not be held at the same court in which the foreclosure action was filed. The Foreclosure Diversion Program has been implemented across the State by judicial region. Information on which courts have been designated to hold mediation can be found here.
What information will be needed for the mediation session?
As mentioned above, the plaintiff/lender must provide certain financial
forms/questionnaires to the defendant/homeowner at the time the complaint
is served. The homeowner must complete and return these forms no later
than 21 days after the informational session or 42 days after the service
of the summons and complaint if no informational session is held. All of
the information contained in these completed forms will be used by the
plaintiff/lender to prepare any proposals for discussion during mediation.
In addition, the mediation order will instruct parties about what other
information they must provide, including specific inputs for the FDIC Net
Present Value Tool used by the mediator.
What is the FDIC Net Present Value tool?
Mediators are required by statute to use the Net Present Value tool developed by the FDIC. This tool is sometimes referred to as “mod in a box.” The Net Present Value tool will not compel any result during mediation, rather, it will calculate for the homeowner the amount of an affordable mortgage payment and for the lender, it will calculate whether modifying the mortgage loan is in its financial interest.
More information about the tool can be found at
the FDIC’s
web site.
What issues will be addressed at the mediation?
The mediation shall address all issues of foreclosure, including but not limited to:
- Proof of ownership of the note and any assignments of the note;
- Calculation of the sums due on the note for principal, interest, and any costs or fees, reinstatement of the mortgage, modification of the loan; and
- Restructuring of the mortgage debt.
Do I need to have my client present at the mediation session?
The homeowner, the lender or a representative of the lender, the lender’s attorney, and homeowner’s attorney (if represented) must attend the mediation session. The lender or a representative of the lender must have the authority to agree to a proposed settlement, loan modification, or dismissal of the action.
However, the lender or its representative may participate by telephone or video when the lender is represented by counsel who appears in person and who has authority to agree to a proposed settlement. When a lender participates by telephone or video, lender’s counsel must ensure the quality of the connection is sufficient to allow clear communication for the duration of the session. Lender ’s counsel may be required to furnish a speakerphone for use in the mediation room, or elsewhere. When equipment is available, the lender is required to make arrangements for the call (such as use of a toll-free number or automated conference service).
What are my client’s obligations in mediation?
Both parties are expected to negotiate in good faith. A failure to do so may result in sanctions by the court, including the dismissal of the action.
After the homeowner submits his or her financial information to the lender, is a lender permitted to engage in workout discussions with a homeowner prior to mediation?
Yes, informal workouts are permitted. Of course, lenders must communicate with a homeowner’s lawyer if he or she is represented. If a resolution is reached prior to scheduled mediation, parties must notify the court as soon as possible.
What if the homeowner does not submit the necessary financial information to the plaintiff’s attorney on time?
M.R. Civ. P. 93(c)(5) requires plaintiff’s attorney to notify the court in writing that a defendant has failed to comply with the requirements for mediation (and provide copy of this notice to the defendant), if the plaintiff’s attorney has not received the forms by the 23rd day after the informational session, if one is held, or by the 44th day after service of the complaint and summons, if no informational session is held. If the defendant has failed to attend a scheduled informational session and has failed to send the required paperwork to plaintiff’s counsel on time, the court may order that mediation not occur and return the case to the regular court docket.
Whom may I contact if I have questions?
If you have questions or suggestions about about the Foreclosure Diversion Program, please contact: Laura Pearlman, the Foreclosure Diversion Program Manager at (207) 822-0706 or by email FDMP@courts.maine.gov.
