I had my first mediation earlier this month and had several thoughts come out of it worth sharing (one assumes anyway).
The King County DRC had the HAMP Net Present Value Excel spreadsheet available on computer in the mediation room. Those mediating outside the DRC should look into obtaining a copy. I'm told it is no longer available online.
If the borrower has provided income documentation as required I suggest running the NPV, even if the parties are not inclined to. As this mediaiton started the Beneficiary was focused mostly on documentation and underwriting needs and was angling it seemed to continue or postpone the mediaiton while the document requests went back and forth.
Using the 31% of monthly income target provided in HAMP and other programs, we ran the NPV. When the NPV for this income showed a substantial benefit over foreclosure, it reinvigorated the discussions.
I have come to think this should be an essential element of the session to help the mediator determine good faith. With a sizable benefit to the mortgage investors as demonstrated by the NPV it would most likely be bad faith not to proceed meaningfully towards an agreement. It also keeps the Beneficiaries and Lenders from playing delaying games with the paperwork requirements, etc.
My next realization came when the parties expressed a desire to continue negotiations outside of the mediation. While this is a good and desired thing, I realized it might be a mistake to issue a Good Faith Certification at this point. Given the NPV outcome I could see no reasonable way for the Beneficiary not to proceed to agreement. I felt the certification needed to be withheld pending news on their negotiations.
This meant that something had to be done to keep the file open, so as not to raise issues about the 10 day clock for the certification. I drafted a mediation report to memorialize the session with clear language the file was being kept open, and the certificate being withheld pending further negotiations.
I hope this gives others food for thought.
I should mention I felt the mediation report was necessary as I could not persuade the parties to execute an MOU or agreement.
Very helpful, Roger. Thanks.
My first foreclosure mediation was a few months ago. Using the online NPV within the mediation setting (on large screen) proved to be valuable for bringing about mutual agreement (in this case that borrower did not qualify for loan modification), but more importantly, brought about trust in the mediation process for both beneficiary and borrower.
Nice to see the NPV working as I understand it was intended.
Not sure whether this is what you're saying or not, Roger, but it prompts me to say that the statute makes it explicit that extensions must be done by the (written) agreement of the parties. That, combined with the 45-day requirement to hold a session, and the 7-day requirement to certify, both of which are mandatory on us, make it very explicit that the parties determine whether a mediation is held open or not, not us. I know I've heard mediators say they can do this on their own, and I disagree. Although the proof in that pudding is whether a party would enforce the statute's requirements. And for me, this is all unnecessary because Standard I of the Model Standards of Conduct that the parties determine their own choices. I see our job is to help them get there.
This issue is coming up in the legislative workgroup where borrower's representatives are floating the idea of giving the mediators authority to extend on their own initiative. For me, that goes the wrong direction, doesn't help, and pulls us deeper down into the quasi-adjudicator quicksand.
The parties here felt they were close to an agreement and just relieved and ready to quit for the day. They agreed they might need another session for details but did not have the energy left to proceed through an agreement or MOU. It leaves us in an awkward spot relative to the Certification of good faith. Frankly if this one collapsed given the strong numbers we have from the NPV, I don't think it could have been good faith. I wasn't willing to issue it without follow on. Sooo . . . .