By SYLVIA HSIEH, Lawyers USA, the national sister publication of Lawyers Weekly
Lawyers in Vermont were trained last month in “foreclosure mediation” in preparation for a new state law that requires mediation before a home is foreclosed on.
Eleven states have recently passed statutes or court rules requiring some form of mediation or conference between a lender and borrower before a foreclosure. The laws are intended to relieve the courts of the tidal wave of foreclosures.
The Vermont statute, which went into effect July 1, requires that mediators be licensed attorneys who take the special training.
Looking to carve out a niche that complements his solo practice in real estate and estate planning law, Michael D. Caccavo, an attorney in Barre, Vt., attended the training along with about 120 other attorneys.
“It was a good turnout. Foreclosures have gone up 50 percent since last year in Vermont. It looks like there will be a fair amount of work out there,” he said.
The two-day training focused on the new federal mortgage modification rules under the Home Affordable Modification Program.
Under the Vermont statute, a borrower who makes an appearance must be given mediation; even without an appearance a borrower can request mediation up to four months after a judgment of foreclosure.
A mediator will serve a hybrid role, acting as a compliance officer to make sure servicers are following HAMP and giving qualified borrowers an opportunity to modify their loans, while at the same time getting both parties to consider other options such as a short sale or deed in lieu of foreclosure, Caccavo said.
There has been a mini-explosion of work for lawyers representing homeowners, servicers and those serving as mediators, said Geoff Walsh, an attorney at the National Consumer Law Center in Boston who conducts training for attorneys.
A cottage industry for lawyers trained in these areas has also developed in Nevada under mandatory foreclosure mediation passed last year, said Michael Joe, a foreclosure specialist at the Consumer Right Project in Las Vegas, who trains attorneys on becoming mediators and on representing homeowners in foreclosure mediations.
In most states with a mandatory mediation program, a mediator is paid $400, either imposed on the servicer alone or split between the borrower and servicer.
Lawyers representing homeowners in mediation proceedings are charging $1,000 -$3,000, Joe said.l