For homeowners in the District who are behind on their mortgages, paying attention to the mail is now more important than ever before.
Thanks to the Saving DC Homes from Foreclosure Act -- a piece of emergency legislation passed by the DC Council last fall -- lenders are now required to send mediation packets to homeowners offering them the chance to participate in mediation prior to moving forward with foreclosure. The goal of the mediation program is to preserve homeownership and avoid foreclosures where alternatives, such as loan modification, are feasible. In addition, the new mediation law requires lenders to prove their standing and to review homeowners for loan modification in good faith.
Although the mediation law technically took effect last fall (causing foreclosures of residential mortgages in DC to be suspended because the contents of the required mediation packet were not yet available), the accompanying regulations and forms issued by the Department of Insurance, Securities and Banking went into effect on May 25, 2011 – meaning that lenders may now resume foreclosure activity so long as they comply with the rules regarding pre-foreclosure mediation.
Now that the mediation program is “live,” it is only a matter of time before the immense backlog of loans in default begins to resurface – and many DC homeowners, especially those with lower incomes, will need the help of advocates more than ever. Legal Aid is taking steps to reach out to homeowners letting them know what mediation is, how it works, and where they can get help if they cannot afford a lawyer. As a part of that effort, Legal Aid recently ran internal bus ads providing information about the mediation program on over 300 WMATA metrobuses, using funding from an Equal Justice Works Innovation Grant. The bus ads used the slogan, “Mediation – Choose it Or Lose It,” attempting to emphasize that homeowners must affirmatively opt in to mediation within the required timeframe in order to obtain the benefit of the new law.
Legal Aid’s Consumer Unit is available to help lower income homeowners opt in to mediation and to represent homeowners at the mediation sessions themselves. In addition, Legal Aid is partnering with the law firm of Cohen Milstein Sellers & Toll, PLLC where several attorneys will offer their pro bono assistance and representation with mediation to homeowners referred by Legal Aid. Applicants seeking assistance with this process should call Legal Aid’s foreclosure mediation intake line at (202) 386-6699.