The courts are becoming the last refuge for homeowners who are in foreclosure but still hope to remain in their homes under a loan modification. Actions taken by courts or by the state government in Pennsylvania, Florida, New Jersey and Connecticut are requiring mediation between mortgage servicers and delinquent borrowers before the property at issue is allowed to be sold.
The Court of Common Pleas for Philadelphia County launched the Residential Mortgage Foreclosure Diversion Program in April 2008. This pilot program required a judicially supervised “conciliation conference” between the owner-occupant of residential property and the lender or mortgage servicer before the property was eligible for a sheriff sale.
More recently, the Florida Supreme Court instituted a statewide managed mediation program designed to improve the level of communication between the plaintiff (lender) and the borrower.
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