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What “Mandatory” Really Means in Foreclosure Mediation

Susan M. Yates, July 13th, 2015

There is a lot to be learned by reading RSI’s evaluation of the foreclosure mediation programs that are supported by a grant from the Office of the Illinois Attorney General. The evaluation, which was conducted and written by RSI’s amazing Director of Research, Jen Shack, is comprehensive, well-reasoned and insightful.

One thing that struck me is how the various programs use the term “mandatory” to describe mediation services. When I think of mandatory participation in mediation, I think of the typical family mediation program for contested child-related issues in which parents must attempt mediation (barring certain disqualifying factors) or the court will not move forward with their case. In foreclosure mediation, some programs call themselves mandatory, but court rules impose no negative consequences if the homeowners do not try mediation. But once homeowners enter the mediation program, participation is mandatory for the lenders. (There is an exception, a foreclosure program that requires lenders to set a meeting with homeowners before they can file their court case.)

So, why do courts call their programs mandatory?

Calling a foreclosure mediation program “mandatory” reflects the outlook of the court. Does the court see the mediation program as a step in the foreclosure process that most homeowners should and will use? If so, the court might call the program mandatory. If a court sees mediation as more of an optional path that some homeowners might pursue, they are more likely not to call it mandatory.

How do courts make these decisions about whether to call their programs mandatory?

Like other dispute system design decisions, whether to call a program mandatory reflects the caseload, resources and culture of the jurisdiction. A court that wants to encourage as many homeowners as possible to participate in mediation may call its program mandatory. It might even require that a pre-mediation session be scheduled with the homeowner before the lender can file its case in court. There are reasons not to call a program mandatory, too. A court with a larger caseload, which is concerned about being flooded with cases, may choose to direct its resources to serving those homeowners whose homes can be saved, rather than putting scarce resources to graceful exits for homeowners who cannot retain their homes. If the culture of the court values self-reliance, the program might require homeowners to accomplish some steps to enter, to prove that they are serious about saving their homes and committed enough to the process to successfully complete it.

Bottom line: calling a foreclosure mediation program “mandatory” may not mean that homeowner participation is required, but it can tell you a lot about how the court views the program and wishes it to be perceived.

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