Attorney Frequently Asked Questions

What is the Foreclosure Diversion Program?
What foreclosure cases are eligible for FDP mediation?
Is participation in FDP Mediation mandatory?
How does a homeowner become aware of the FDP?
What information is required before mediation?
Does participation in the Foreclosure Diversion Program stay the foreclosure action?
How long is the mediation period?
Where are mediation sessions held?
What information will be needed for the mediation session?
What is the FDIC Net Present Value tool?
What issues will be address at the mediation?
Must my client attend the mediation session?
What are my client's obligations in mediation?
May the parties engage in negotiations outside mediation?
Are foreclosure actions brought by condominium associations pursuant to 33 M.R.S. § 1603-116(a) eligible for FDP mediation?
Whom may I contact if I have questions?

 

What is the Foreclosure Diversion Program?

The Foreclosure Diversion Program (FDP) is a foreclosure mediation program to assist lenders and homeowners reach mutually agreeable resolutions of mortgage foreclosure actions through the mediation process.  The governing authorities are:

What foreclosure cases are eligible for FDP mediation?

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 FDP mediation if the property involved is the primary residence of the homeowner.

Is participation in FDP Mediation mandatory?

When a qualifying homeowner appears, answers, or files a written request for mediation participation is mandatory for the lender and lender’s counsel.  If an answer is filed but the defendant does not wish to have mediation, the defendant should affirmatively waive mediation (see M.R.Civ.P. 93 (m)), or the clerk will schedule it.

How does a homeowner become aware of the FDP?

Plaintiffs must attach a One-Page Answer Form (designed by the Bureau of Consumer Credit Protection) to foreclosure complaints in eligible cases.  The form provides both notice of the FDP, and a form answer.  Filing the form answer puts the case into the FDP.  The Judicial Branch website also provides information for homeowners, and the Bureau of Consumer Credit Protection has created an awareness campaign.

What information is required before FDP mediation?

When parties receive the Scheduling Order for Informational Session and Notice, they are advised as to what forms need to be completed and filed with the court.  Lenders must complete form FDP-02A to provide financial information about the loan and the value of the property.  Borrowers must complete form FDP-02B, which is provided by the clerk at the Informational Sesison, as well as other financial forms needed by lenders to review the loan.  Fillable pdf versions of these forms can be found here.

Does participation in the Foreclosure Diversion Program stay the foreclosure action?

While a case is in the FDP, no dispositive motions or requests for admissions may be filed until five (5) days after the mediation is completed either by the submission of a Final Mediator’s Report or Court Order.

How long is the mediation period?

The mediation period begins when the court sends an order scheduling mediation.  Mediation is expected to be completed within 90 days unless the parties agree to extend the period, or unless the plaintiff’s delay results in a court order extending the period.

Where are mediation sessions held?

Mediations are almost always held in courthouses.  Special permission may be sought to hold mediations in alternate sites, but case files must remain in courthouses.

What information will be needed for the mediation session?

Lenders should bring form FDP-02A if not previously filed, all needed forms for loan review (blank), and a fair market valuation of the property.  Homeowners should bring their most current pay stubs and any other relevant updated financial information and recent correspondence from the lender.

What is the FDIC Net Present Value tool?

The FDIC Net Present Value tool (NPV) is a spreadsheet that calculates the value to the lender of modifying the loan as opposed to foreclosing on the property.  Mediators are required to prepare the spreadsheet as part of the mediation process.  Insome cases, this spreadsheet may not be prepared until after the first mediation session.

What issues will be addressed at the mediation?

All issues of foreclosure may be discussed, including:

  1. Proof of ownership of the note and any assignments of the note;
  2. 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
  3. Restructuring of the mortgage debt.
  4. Non-retention alternatives to foreclosure.

Although all issues may be discussed, the focus of mediation is on possible ways to work out the loan and resolve the foreclosure.  Issues that require litigation may be identified but not resolved in mediation.

Must my client attend the mediation session?

The homeowner, the lender or a representative of the lender, and attorneys of record must attend the mediation session.  The attending 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 telephone equipment is available, the lender must make arrangements for the call (such as a toll-free number or automated conference call).

What are my client’s obligations in mediation?

Both parties in mediation must attend and make a good faith effort to mediate, and failure to do so requires the mediator to submit a Report of Noncompliance to the court.  As a result of such a report, a judge may order sanctions, including the dismissal of the action.  The FDP has developed guidelines regarding good faith mediation, available here.

May the parties engage in negotiations outside mediation?

Yes, communicating outside of mediation sessions is encouraged.  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.  It is helpful if parties indicate the nature of the resolution of the dispute.

Are foreclosure actions brought by condominium associations pursuant to 33 M.R.S. § 1603-116(a) eligible for FDP mediation?

No. See December 1, 2010 Announcement for a more detailed explanation.

Whom may I contact if I have questions?

If you have questions or suggestions 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.