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Protecting the Homeowner’s Rights to Self-Determination in Foreclosure Mediation

Monday, December, 24, 2012


Since the beginning of the mortgage and housing market crisis that began in 2008, millions of homeowners have been faced with the possibility of losing their homes to foreclosure.  In order to combat these rising foreclosure rates, many jurisdictions across the country have implemented mediation programs to facilitate communication between homeowners and lenders and (hopefully) avoid foreclosure. 

However, it has been determined by legal experts that in these foreclosure mediation proceedings, if the homeowner’s right to self-determination, which is a core component of mediation, is not upheld, these proceedings are not working toward the true aims of mediation.  For example, in most situations, the lender and the homeowner are not equal in terms of their experience when dealing with the legal system as it relates to foreclosure practice.  While lenders cycle through multiple foreclosure cases on a daily basis, the homeowners have likely never dealt with the foreclosure process and are therefore generally unaware of the nuances and timelines involved in the proceeding. 

These lenders become what is known as “repeat players.”  According to Shana H. Khader, in her article “Mediating mediations:  Protecting the homeowner’s right to self-determination in foreclosure mediation programs,” repeat players “have the ability to better predict legal outcomes and to maximize their gains over the course of their long-term relationships with the legal system.  In contrast, ‘one-shotters’ — in this case, the homeowners — approach the system with fewer resources, especially in terms of expertise, and with a single opportunity to seek justice.  This disparity represents a disadvantage in relation to the repeat players within the legal system.”

According to Khader, the ways to protect against this are ensuring that the homeowner understands the legal implications of the process.  She states, “In order for homeowners to make informed decisions in the foreclosure mediation process, they must have some knowledge of the likely outcomes of the legal process… such information is critical to a homeowner’s ability to exercise the right to self-determination in the foreclosure mediation context, as well as who is best equipped to provide such information in a way that protects the homeowner in the mediation process.”