I have had several mediations recently where the beneficiary shows up solely to deliver a message to the borrower that there will be no modification and the options are total reinstatement, with arrearages, late fees, etc. or total payoff.
These are a complete waste of time, for everyone. And the borrowers shows up, pays $200 for their part of the session fees, brings a lawyer who's charging them, takes time off work, etc.
It has led me to look at the requirement that the beneficiary supply the borrower with
(viii) An explanation regarding any denial for a loan modification,
forbearance, or other alternative to foreclosure in sufficient detail
for a reasonable person to understand why the decision was made;
(old act 20 days before session, amended now to 10 days)
I am thinking that failure to give such a letter to the borrower before the session in these cases may be a violation of the duty for good faith. I'd be interested in what people think.
It seems clear to me that the purpose of this requirement is so borrower comes to the session with an understanding of the basis of the decision and time to prepare for addressing it. Or int he alternative to cancel the session if they see the expense will be for naught.
Beneficiaries are telling me they have no duty to create such, and certainly not if the decision is reached after the passage of the production requirement. To me this negates the section as you can always claim we made the decision on day 8 before the session. I lean towards looking at the purpose of the provision and requiring it. Maybe even putting it in the mediation preparation documents as a requirement?
Anyway, interested in what folks think.
Roger, can you clarify this statement:
"Beneficiaries are telling me they have no duty to create such, and certainly not if the decision is reached after the passage of the production requirement."
Also, is this a common occurrence for you? BTW, I believe at both KCDRC & SnoCo fees are non-refundable once paid, so cancelling would not save the borrower anything.
I thought DOC has been very clear that documentation of a decision to deny a mod was necessary in most cases.
I had one tell me if in the course of their standard business they had created such a ltter they were required to submit it. But that they were under no obligation to create such a document to meet the requirements of the act.
A very strange position from where I sit!
The second clause has to do with if the decision to deny comes after the 10 day submittal deadline has passed - say they decide 8 days before the session, when the act requires it be given to the borrower 10 days before. Should they still submit ASAP and allow borrower to postpone so purpose of the provision is met?
I have another case where the beneficiary has not reviewed the submittal in several months and a second mediation is being discussed. Borrowers have asked for a decision before the second mediaition - and I am inclined to say upfront such a letter should come with it if it is a denial.
I know this is an old conversation, but I just stumbled on it again and it's still timely.
The mediator is also authorized to arrange pre-session communications " to ensure that the parties have all the necessary information and documents to engage in a productive mediation." RCW 61.24.163(7)(a).
For me, if the borrower has applied for a modification and the beneficiary is reviewing it, having the decision communicated before the mediation session is necessary information to have a productive mediation.
I work very closely with the parties to see that the review is completed and decision communicated before the mediation session. I may encourage them to consider if reschedulings are useful to provide a reasonable time necessary to complete the review. I sometimes set-out an information exchange schedule for them.
The result is we do have decisions before we meet, have fewer second sessions than some others do, and we have much more productive sessions.