EMERGING STRATEGIES FOR 

EFFECTIVE FORECLOSURE MEDIATION 

PROGRAMS
About HUD 

The U.S. Department of Housing and Urban Development's mission is to create 

strong, sustainable, inclusive communities and quality affordable homes for all. 

HUD is working to strengthen the housing market to bolster the economy and 

protect consumers, meet the need for quality affordable rental homes, utilize 

housing as a platform for improving quality of life, build inclusive and sustainable 

communities free from discrimination, and transform the way HUD does 

business. More information about HUD and its programs is available on the 

Internet at www.hud.gov and espanol.hud.gov. HUD provides foreclosure 

prevention information for homeowners in foreclosure or worried about 

foreclosure on its Avoiding Foreclosure website.

About the Access to Justice Initiative

The Access to Justice Initiative of the U.S. Department of Justice has several

distinct but related missions. It is charged with improving the availability and 

quality of indigent defense; enhancing civil legal representation for those without 

great wealth, including the middle class as well as the poor; focusing with special 

care upon the legal needs of the most vulnerable among us, including 

immigrants, juveniles, the homeless, veterans, and victims of domestic and sexbased violence; working with federal, state, and tribal judiciaries in strengthening 

fair, impartial, and independent adjudication; promoting less lawyer-intensive and 

court-intensive solutions when possible; exchanging information with foreign 

ministries of justice and judicial systems on our respective efforts to improve 

access; and encouraging the development of more thoroughly evidence-based 

solutions to problems in the delivery of legal services. More information about 

the Initiative is available at www.justice.gov/atj. 
Table of Contents

Introduction ...........................................................................................................1

Program Administration and Design .....................................................................3

Automatically Scheduled vs. Opt-in Process for Homeowners .............................4

Stakeholder Involvement ......................................................................................4

Access to Counselors ...........................................................................................5

Training and Support ............................................................................................5

Integration with Federal and State Foreclosure Relief Programs..........................6

Documentation Requirements ..............................................................................7

Accountability Measures .......................................................................................7

Research and Evaluation .....................................................................................7

Conclusion ...........................................................................................................8

Mediation Program List ........................................................................................9

Helpful Links ......................................................................................................11
1

Introduction

The loss of a home to foreclosure can be devastating for a family. In addition 

to losing what is often their most significant asset, families are uprooted from 

community supports and may find themselves with no place to go. The losses 

extend beyond individual families: Foreclosures destabilize entire neighborhoods 

through declines in surrounding property values, loss of tax revenue, and blight. 

As foreclosures continue to impact homeowners, tenants, and communities, the 

Access to Justice Initiative of the U.S. Department of Justice and the U.S.

Department of Housing and Urban Development (HUD) have joined with the Vice 

President’s Middle Class Task Force to seek solutions to the foreclosure crisis

that focus on homeowners. That endeavor has included a close study of efforts 

already underway that have demonstrated some success in protecting 

homeowners in danger of losing their homes, and of ways in which the 

government can support those efforts. 

Federal, state, and local law and policy makers have initiated a broad array of 

interventions to the foreclosure pandemic, including loan modification programs 

such as the federal Home Affordable Modification Program (HAMP), mortgage 

payment assistance and principal reduction programs, counseling assistance, 

funds to promote neighborhood stabilization, and regulatory reform. One vehicle 

that can usefully coordinate a number of these foreclosure mitigation tools is 

foreclosure mediation. Jurisdictions around the country are increasingly offering 

mediation programs as an opportunity for lenders1and homeowners to reach 

mutually agreeable and beneficial alternatives to foreclosure. Mediation 

programs have the potential to decrease the number of defaults resulting in 

foreclosure, increase the likelihood that mortgage terms can be renegotiated, and 

facilitate “graceful exits” by negotiating short sales, deeds-in-lieu of foreclosure

(where the homeowner deeds the home to the lender in exchange for a release 

of liabilities under the mortgage), or other alternatives for homeowners who are 

unable to keep their homes.

More than 25 foreclosure mediation programs have been created in at least

14 states. Although many programs are still finding their footing, outcomes from 

several established programs are impressive, with some boasting 70-75 percent 

settlement rates with approximately 60 percent of homeowners reaching 

settlements that allow them to remain in their homes.2

Given the promise shown by foreclosure mediation programs, the Access to 

Justice Initiative and HUD have reviewed programs around the country in order 

 

1 The term “lenders” is used in this report to refer collectively to lenders as well as 

servicers, who collect and process loan payments during the life of a loan on behalf of 

lenders. 

2 See Alon Cohen, Andrew Jakabovics, Center for American Progress, Now We’re 

Talking 5 (June 2010). 
2

to identify strategies that promote successful outcomes. The purpose of this

report is to describe several program features that appear to have a positive 

impact on the effectiveness of mediation programs, and to offer those features

for consideration by jurisdictions that are seeking to develop or expand 

programs. Also included is a list of a number of existing foreclosure mediation 

programs throughout the nation that are interested in sharing their experiences 

with mediation program stakeholders in other jurisdictions.

3

 

Importantly, this report is not intended to promote a one-size-fits-all approach, 

as each state’s respective statutory framework for the foreclosure process and 

other variations in local context and needs will and should dictate program design 

at the sub-national level. We also stress that this report is not intended to 

encompass the full scope of the Obama administration’s policy response to the 

ongoing challenges facing homeowners. Our administration will continue to 

rigorously pursue the interventions noted above and to actively monitor the 

market to make sure we are doing all we can to help homeowners in need. 

 

3 This list is not meant to be comprehensive, and the mention of any specific program in 

this report does not constitute an endorsement by the U.S. Department of Justice or the 

U.S. Department of Housing and Urban Development.
3

Program Administration and Design

A defining feature of mediation programs is the presence of neutral third-party 

mediators who can help parties reach agreement on an alternative to foreclosure

in circumstances where such an outcome is feasible. The third party does not 

have to be present at every stage of mediation. For example, the foreclosure 

mediation program in Philadelphia relies on pre-mediation “conciliation 

conferences,” where the parties are required to meet to discuss foreclosure 

alternatives. A mediation session with a third-party mediator is required only 

where the parties are unable to reach an agreement at the conciliation meeting. 

Further, foreclosure cases come before a judge only if formal mediation fails to 

resolve the matter. These conferences and mediation sessions ensure that 

judges are being called upon to address only the toughest cases, and thus are 

an effective way to decrease the mediation program’s burden on court officers.

 

Although many programs rely on sitting judges to oversee mediation 

sessions, this is by no means uniformly true. New York City’s foreclosure 

mediation program and others rely on court-supervised “referees” – typically 

retired judges and lawyers – to supervise mediation. Several jurisdictions have 

contracted with non-profit organizations, such as the Center for Conflict 

Resolution in Illinois and the Collins Center for Public Policy in Florida, to 

administer mediation programs. In Milwaukee, Wisconsin, the Milwaukee 

Foreclosure Mediation Program is run by Marquette University Law School, 

where a full-time chief mediator oversees a roster of trained volunteer attorneymediators. 

Judicial foreclosure states4are also not the only forums in which mediation 

programs have been established. The state of Nevada, a non–judicial foreclosure 

state, requires lenders to participate in mediation before a foreclosure can 

proceed. Providence, Rhode Island imposes a fine on servicers that proceed to 

foreclosure without attempting mediation, while New Hampshire’s foreclosure 

mediation program relies on the voluntary participation of lenders.

Mediation programs can also be used as an intervention tool prior to the 

lender’s filing of a foreclosure notice, when homeowners may be in the best 

position to rectify arrears and when servicers can potentially avoid the significant 

costs of initiating the foreclosure process. Fannie Mae has recently announced a 

new policy that requires servicers to determine whether delinquent mortgage 

loans secured by properties in Florida are eligible for mediation prior to initiating 

foreclosure proceedings and, if they are eligible, to proceed in accordance with 

Fannie Mae’s policy guidance on pre-filing mediation.

 

4

In judicial foreclosure states foreclosures are processed through the courts. In 

contrast, in non-judicial foreclosure states lenders are permitted to proceed directly to a 

foreclosure sale without court action. 
4

Automatically Scheduled vs. Opt-in Process for Homeowners 

Mediation programs generally follow one of two models for homeowner 

participation: an opt-in process, where the homeowner is notified of his or her 

eligibility but must affirmatively request mediation before being entered into the 

program; or an automatically scheduled, or opt-out, process, where homeowners 

who receive a notice that foreclosure has begun are automatically scheduled for 

a mediation session. Participation rates appear to be considerably higher in 

jurisdictions that have automatically scheduled programs, generally 70 percent 

and higher in jurisdictions such as Connecticut and New York, as compared to 

opt-in programs, which typically have participation rates for eligible home owners 

below 25 percent. Notably, Connecticut’s program, the nation’s first state-wide 

foreclosure mediation program, was originally opt-in and did not see a drop in 

settlement rates when the program switched to an automatically scheduled 

process, despite an increase in the number of homeowners participating in the 

program. An important question for any jurisdiction that is contemplating an opt-in 

versus an automatically scheduled program is whether the program has the 

capacity to accommodate the higher volume of homeowners who will likely be 

brought into the program through automatic scheduling. 

Foreclosure mediation programs of either type should consider how they will 

ensure adequate levels of homeowner participation. Philadelphia and Milwaukee 

County are examples of jurisdictions that have invested in outreach programs

that have sent community coordinators or organizers door-to-door in targeted 

neighborhoods to educate homeowners at risk of foreclosure about the benefits 

of mediation programs and to link them with counselors who can assist them 

during the process. 

Stakeholder Involvement 

Stakeholder involvement is a major factor in the success of mediation 

programs. In several jurisdictions, the courts, legislatures, lenders, and 

homeowner advocates have come to the table at an early stage to devise 

meaningful interventions in the context of foreclosure mediation programs. By 

working together, all parties can voice their concerns and help craft a process 

that is both efficient and fair, and not unduly burdensome to either party. To the 

extent possible, the involvement of all parties, including representatives from the 

lending community, during the planning stages increases the likelihood that 

parties will be receptive and active participants once the program gets off the 

ground. 
5

Access to Counselors 

There is broad consensus that homeowners fare better in mediation when 

assisted by a knowledgeable housing counselor and/or lawyer. These advocates 

can also help the process run more smoothly by helping gather loan documents, 

identifying loan modification options, and facilitating communication between the 

homeowner, mediator, and counsel for the lender. Almost all mediation programs 

provide homeowners with notice of the availability of free housing counselors, 

and sometimes legal assistance, or otherwise require the lender to do so. A 

smaller number of programs, including those in Cook County, Illinois,

Philadelphia, and New Jersey, go further by coordinating or requiring counseling 

assistance prior to or at mediation sessions. Some programs also have 

established or facilitated relationships between counseling agencies, legal aid 

providers, and pro bono attorneys. For example, the Circuit Court of Cook 

County’s Mortgage Foreclosure Mediation Program requires a homeowner who 

is seeking mediation to meet with a HUD-certified housing counselor (either with 

an on-site counselor directly through the program or with another HUD-certified 

housing counselor of his/her choosing) and with an attorney in advance of 

mediation. The program provides housing counseling services and legal services 

at no cost to any homeowner who needs the assistance and meets the eligibility 

requirements, regardless of income. The housing counselor helps the 

homeowner obtain necessary paperwork and make an assessment of the best 

option for the homeowner (modification, short sale, etc.). The homeowner also 

has a consultation session with a pro bono attorney who reviews the paperwork 

to make an initial determination of whether the homeowner has a legal defense 

to foreclosure that should be pursued through the courts. Where appropriate, the 

attorney will help the homeowner prepare a request to the court for appointment 

of pro bono counsel. If there is no defense to the foreclosure, and the case 

proceeds to mediation, the homeowner will have the assistance of a pro-bono 

attorney throughout the mediation process. At least anecdotally, additional 

assistance by counselors and attorneys in foreclosure mediation programs such 

as Cook County’s has proved effective at improving access to qualified housing 

counselors and legal assistance for homeowners facing foreclosure. 

Training and Support 

In order to be successful, mediation programs must ensure that participants 

helping to facilitate the mediation process are well-trained. The housing 

counseling agencies that participate in many programs have extensive in-house 

training both on available resources and programs at the federal and state level, 

including state and federal mortgage assistance programs and community-based 

resources, as well as on the details and functioning of the mediation program 

itself. NeighborWorks®, a national non-profit created by Congress that 

administers the National Foreclosure Mitigation Counseling Program, will offer a

workshop dedicated exclusively to mediation-related education at its 

NeighborWorks Training Institute in December 2010.
6

Well-trained lawyers are also an important tool in mediation programs, as 

there may be homeowners for whom mediation reveals a legal issue that 

requires the assistance of an attorney. Although legal resources for homeowners 

in mediation programs generally are quite limited, many programs do enjoy the 

participation of legal aid offices and pro bono attorneys coordinated by a local bar 

association or other organization. However, these attorneys may well be 

hamstrung by a lack of familiarity with the complex legal issues that arise in the 

foreclosure context. To that end, HUD plans to record and disseminate a new 

training program for pro bono and legal services lawyers who are assisting 

homeowners in connection with foreclosure mediation programs.

Integration with Federal and State Foreclosure Relief Programs

The Obama Administration’s foreclosure relief programs, including the Home 

Affordable Modification Program (HAMP), the Hardest Hit Fund, principal

reduction programs, FHA loss mitigation options, and the Home Affordable 

Foreclosure Alternatives (HAFA) programs, as well as state relief programs, have 

increased the options available to homeowners at risk of foreclosure. Mediation 

programs that take advantage of and/or help facilitate homeowners’ access to 

these programs, either through the assistance of knowledgeable mediators or 

counselors, or with other program requirements, will in all likelihood achieve 

greater success than programs that do not. 

The recently-enacted Dodd-Frank Wall Street Reform and Consumer 

Protection Act also offers protections to homeowners that may be realized in the 

context of a mediation program. For example, the Act requires that every 

servicer participating in HAMP that denies a homeowner’s loan modification 

request on the basis of net present value (NPV) analysis provide that homeowner 

with the data used to make its calculation. A foreclosure mediation program is a 

proper venue in which a lender may provide the information to a homeowner, and 

well-structured programs should provide a space for that transaction to occur.

Several mediation programs have been working to educate program 

administrators about HAMP and other federal and state foreclosure prevention 

programs, and have instituted oversight measures to help increase the number of 

homeowners who are able to secure foreclosure relief through these programs. 

Connecticut’s foreclosure mediation program retains all mediation cases in which 

a homeowner has received a temporary HAMP modification until a permanent 

HAMP modification is obtained. Vermont is the first mediation program to require 

lenders, as part of the mediation process, both to calculate the NPV in 

accordance with HAMP guidelines and actually to produce the NPV inputs and 

outcome to the homeowner and mediator. If the lender fails to comply with the 

mediation statute, the court is empowered to impose sanctions, including 

prohibiting the lender from scheduling or conducting a foreclosure sale. 
7

Documentation Requirements

Most foreclosure mediation programs require homeowners participating in the 

program to provide documentation of available resources and a budget plan. 

Some programs, like Maine’s foreclosure mediation program, also require 

homeowners and lenders to provide information to complete the FDIC’s publiclyavailable NPV worksheet that determines whether a loan modification is feasible,

and also require that the lender or its representative participating in mediation 

have authority to agree to a proposed settlement. Although requiring 

documentation by the lender at the outset of mediation may prove to be an 

unnecessary obstacle to commencing the negotiation process, there may come a 

time during mediation where such documentation is necessary. Thus, facilitating 

and/or requiring the production of documents may be an important feature of the 

program. 

Accountability Measures 

Several jurisdictions have developed program rules that help ensure 

accountability by mediation program participants. For example, in some court-run 

mediation programs such as Maine’s, courts have the authority to assess costs 

and fees to either party for failure to appear at mediation sessions or to make a 

good faith effort to mediate. Providence’s foreclosure mediation program allows 

mediators to request that lenders provide written documentation of reasons for 

rejecting a loan modification proposal. Vermont’s foreclosure mediation program

requires lenders to provide a copy of any pooling and servicing or similar 

agreement when a lender claims that such an agreement prohibits a loan 

modification. 

Research and Evaluation 

The way to determine whether a mediation program is actually effective is 

through careful tracking and evaluation of program data. At a minimum, 

participation and settlement rates should be tracked. A more comprehensive 

approach would include tracking not just the occurrence of a settlement, but also 

the substance of the agreement (e.g., loan modification, HAMP/non-HAMP, 

repayment/forbearance plan and principal forbearance amount, cash for keys, 

short sale, and other agreements), the time period for achieving resolution 

(tracked in Cuyahoga County, Ohio), and whether homeowners had the 

assistance of a counselor or attorney (tracked in New York City).

The Philadelphia mediation program has also been tracking homeowner 

participant demographics to ensure that there are not unwarranted disparities in 

community participation rates. Several programs have been evaluated with 

private foundation support, but smaller programs like that in Butler County, 

Pennsylvania have been experimenting with low-cost ways to track at least some 

data. 
8

Conclusion

For millions of homeowners at risk of foreclosure, mediation programs 

offer an opportunity to evaluate their options and appraise possible alternatives 

to losing their homes. Well-structured foreclosure mediation programs that are 

designed to take advantage of available resources at the local, state, and federal 

level can be valuable and even essential tools as jurisdictions around the country 

seek ways to combat the foreclosure crisis. The program features described in 

this report should be considered by states and localities as they study how to 

construct new programs or support existing ones. 
9

Mediation Program List5

Connecticut 

State of Connecticut Judicial Branch Foreclosure Mediation Program

http://www.jud.ct.gov/foreclosure/

Delaware 

Delaware Residential Foreclosure Mediation Program 

http://deforeclosurehelp.org/mediation.html

Florida 

Florida Statewide Managed Mediation Program

http://www.floridasupremecourt.org/pub_info/documents/AOSC09-54_Foreclosures.pdf

Hawaii*

Third Circuit Court Foreclosure Mediation Pilot Project 

http://www.courts.state.hi.us/docs/form/hawaii/foreclosure_mediation_notice.pdf

Illinois

Circuit Court of Cook County Mortgage Foreclosure Mediation Program 

http://cookcountyforeclosurehelp.org/

Indiana 

Indiana Foreclosure Settlement Conference Program

http://www.in.gov/judiciary/home/#how

Kentucky

Jefferson County Foreclosure Conciliation Project

http://www.louisvilleky.gov/Housing/News/2009/

Maine

Maine Foreclosure Diversion Program

http://www.courts.state.me.us/court_info/fdp/index.html

 

5 This foreclosure mediation program list includes a least one program in every state that 

has established a foreclosure mediation program that utilizes a neutral third-party to 

oversee at least some aspect of the mediation process. This list is not meant to be 

comprehensive, and does not constitute an endorsement by the U.S. Department of 

Justice or the U.S. Department of Housing and Urban Development. 
10

Maryland*

Maryland Foreclosure Mediation Program

http://www.mdhope.org/ForeclosureMediation.aspx

Nevada* 

Nevada Foreclosure Mediation Program

http://www.nevadajudiciary.us/index.php/foreclosuremediation

New Hampshire*

New Hampshire Judicial Branch Office of Mediation and Arbitration Foreclosure Mediation 

Program

http://www.courts.state.nh.us/adrp/foreclosure/index.htm

New Jersey

New Jersey Judiciary Foreclosure Mediation Program

http://www.nj.gov/foreclosuremediation/index.html

New Mexico

First Judicial District Court Foreclosure Mediation Program

www.firstdistrictcourt.com/Forms/doc/Foreclosure%201.doc 

New York

New York City Mandatory Settlement Conference in Residential Foreclosure Actions

http://www.banking.state.ny.us/hetpinf6.htm 

Nevada*

Nevada Foreclosure Mediation Program

http://www.nevadajudiciary.us/index.php/foreclosuremediation

Ohio

Cuyahoga County Foreclosure Prevention Program 

http://cp.cuyahogacounty.us/internet/ForeClosureMediation.aspx

Pennsylvania 

Philadelphia Residential Mortgage Foreclosure Diversion Program 

http://www.courts.phila.gov/mfdp/

Rhode Island*

Providence 

http://library.municode.com/ordinances/11458/Chapter%20No.%202010-2.pdf 

Vermont

Vermont Foreclosure Mediation Program

http://www.uvm.edu/consumer/?Page=foreclosure.html
11

Wisconsin 

Milwaukee Foreclosure Mediation Program 

http://law.marquette.edu/foreclosure/

* States with an asterisk have a non-judicial foreclosure process. 

Helpful Links 

HUD Foreclosure Resources 

http://portal.hud.gov/portal/page/portal/HUD/topics/avoiding_foreclosure

NeighborWorks America Foreclosure Resources 

http://www.nw.org/network/foreclosure/default.asp

FTC Foreclosure Rescue Scam Information 

http://www.ftc.gov/bcp/edu/microsites/moneymatters/your-home.shtml

Making Home Affordable Program

http://www.makinghomeaffordable.gov/