Thursday, September 19, 2013

Mortgage Foreclosure Mediation Law Takes Effect September 13th

This year the General Assembly passed and the Governor signed into law legislation authored by our office which requires that before initiating a foreclosure, a mortgage lender must offer the owner-occupant of a 1-4 unit residential property a formal process to determine whether foreclosure can be avoided.

This new law which will ensure that every Rhode Island homeowner who is having trouble making their mortgage payments has the opportunity to communicate directly with their lender to try and find a solution that will help them get back on track with their mortgage and remain in their home. It is also an important tool to help direct homeowners to the resources they need early enough in the foreclosure process to make a difference. I am confident that it will result in fewer foreclosures, which is great news for homeowners, lenders and municipalities.

The law took effect on September 13, 2013.  To learn if you are eligible for mortgage foreclosure mediation,  or to speak with a HUD-certified counselor, please visit Rhode Island Housing at or call 401-457-1234 or toll free at 1-800-427-5560.

How does the foreclosure mediation process work for homeowners?

When a homeowner is no more than 120 days delinquent on their mortgage, they will receive notification from their lender or servicer that they have the right to a foreclosure mediation conference. They will be contacted by the mediation coordinator who will give them information on HUD-approved housing counselors who can help them put together the package of financial information they will need for the mediation conference.  If the homeowner decides to participate in a mediation conference, they must inform the mediation coordinator of their decision and a mediation conference will be scheduled. There is no cost to the homeowner for the mediation conference or the housing counselor. If the homeowner does not respond to the mediation coordinator or chooses not to participate in mediation, the mediation coordinator will provide the lender with the appropriate certification needed to move forward with a foreclosure.

At the mediation conference, which will take place no more than 60 days after notice from the lender or servicer, the homeowner, their housing counselor, the foreclosure mediation coordinator and a representative of the mortgage servicer with the authority to negotiate on the lender’s behalf will try to come to an agreement that will allow the homeowner to remain in their home. If they are not able to reach a resolution, and the foreclosure mediation coordinator determines that the lender made a good faith effort to achieve a satisfactory workout, the coordinator will provide the lender with the certification needed to move forward with a foreclosure.