The Ohio Supreme Court recently issued a directive to some of the larger Ohio county courts to implement a foreclosure mediation program. In response, the Cuyahoga County Court of Common Pleas recently announced its proposed foreclosure mediation program. 

The Court's Proposed Program

• The summons being served on the borrower will be accompanied by a form where the borrower can request mediation.  At any time in the foreclosure process, the Magistrate may also assign the case for mediation, even if not requested by the borrower.
  
  
• If a case is referred to the mediator, the lender will be ordered to complete a Mediation Questionnaire within fourteen calendar days, in order to provide the mediator with details regarding the history of the loan.
  
  
• If the mediator decides that mediation is appropriate, the foreclosure case will be stayed until the mediation process is complete.  A "first meeting" will be scheduled.  Although not yet clear, it appears that the lender's loss mitigation representative will be required to attend the first meeting in person, and the borrower will be required to bring three recent pay stubs, bank statements, recent W-2 forms and their most recent tax return to the meeting. The primary purpose of the first meeting is to educate the borrower about available loss mitigation options, and to familiarize the borrower with the lender's loan modification or forbearance agreement forms.
  
  
• A "second meeting" will be scheduled, at which the lender's loss mitigation representative with settlement authority will be required to attend in person.  The purpose of the second meeting is for the mediator to determine whether the parties are prepared to negotiate in good faith during the mediation, which will be scheduled in the future.  If the lender's representative fails to attend or does not appear to have settlement authority, sanctions may be imposed, including monetary penalties, assessment of costs or dismissal of the case.
   
• The mediation, which will be the third meeting between the parties, is scheduled.  The borrower and the lender's loss mitigation representative will be required to attend in person.

Cuyahoga County's proposed program may be well-intentioned, but it imposes significant burdens on the lender, beyond what was contemplated by the Ohio Supreme Court's directive, especially with regard to the requirement that the lender's loss mitigation representative attend up to three meetings in person.

The Problems with the Court's Plan 
The court's stated mission for the program is to:  (1) minimize case processing time; (2) save time and expenses for the parties; (3) and prevent the adverse social consequences of vacant and abandoned houses.  However, the proposed program consisting of two pre-mediation meetings in addition to the mediation meeting, and requiring personal attendance by the lender's representative, contravenes the mission statement.  Even uncontested cases where the borrower has no reasonable possibility of saving the property will likely be stayed and delayed.  If loss mitigation is feasible, it can almost always be accomplished with the lender's loss mitigation representative available by phone, rather then requiring a personal appearance at the meeting.  Hence, positive results could equally be obtained without taking the lender's loss mitigation representative out of his or her office for time consuming and expensive trips to attend up to three meetings in person.  Forcing the loss mitigation representative to attend in person would make the representative unavailable to assist perhaps a hundred other borrowers while traveling to Cuyahoga County to appear at a mediation meeting.  Multiple meetings, rather than conference calls or even a single meeting, would impose a burden on the borrower who would be forced to take off work to attend each meeting.

Our Suggestion for a Better Program 
I recommended that the program can be much more practical and effective for all parties concerned, and better achieve the goals while incurring less costs, as follows:

1. In addition to scheduling a mediation, the mediation request form should contain a prominent recommendation that the borrower contact the lender or the lender's attorney directly.  Rather than waiting for a mediation meeting, the earliest possible communication between the borrower and the lender will yield the best chance for a successful resolution.
   
   
2. The borrower's request for mediation must be accompanied by a complete financial statement and supporting documentation, with copies being delivered to the lender's attorney.  I provided the court with a checklist and a comprehensive financial statement form commonly used by lenders in that regard.  Not only will this promote a resolution directly between the parties at the earliest possible date, it will also assist the mediator in determining whether a mediation request has any viability.  If it does not, there is no reason to schedule a meeting, which would only result in unnecessary attorney's fees.
   
   
3. If the mediator deems the borrower’s information worthy, the mediator can schedule a conference call with the borrower, the borrower's attorney if any, the lender's attorney and the lender's loss mitigation representative.
   
   
4. The mediator can schedule follow-up conference calls until the matter is either resolved or a determination is made that it cannot be resolved.  If it becomes apparent to the mediator that the conference calls are not successful and a meeting might be more productive, then a meeting can be scheduled.

We are hopeful that the Court will take our suggestions seriously, in order to implement a mediation program that can accomplish the intended mission without imposing unnecessary and undue burdens on the lender.  We will keep you advised.