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Information for Lenders - Foreclosure Mediation Program (FMP)

About the Foreclosure Mediation Program

The District of Columbia’s Foreclosure Mediation Program (FMP) was created to address the foreclosure crisis in the District of Columbia. The Program provides homeowners and lenders with an opportunity to meet face-to-face to discuss alternatives to foreclosure.

Why Mediate?

Foreclosure mediation is an inexpensive, cost effective alternative to help parties resolve disputes with the assistance of a qualified mediator or neutral third party. By working together to explore various options, agreements are often reached that benefit both parties.

Advantages

Under the program, both the homeowner and lender must mediate in good faith. The parties are required to honestly work toward a resolution in a fair and reasonable manner. In addition, if a mediation party sends a representative to mediation, the representative must have the authority to negotiate and/or modify the terms of a mortgage. This improves the chances that a homeowner and a lender can reach an agreement because a decision-maker is present (or accessible) during mediation.

Eligibility

The program is open to owners of residential properties, which are improved by four or fewer single family dwellings, including condominiums or cooperative units, located in the District of Columbia, that receive a Notice of Default on Residential Mortgage (Notice of Default) (FM-1).

Mediation Costs

There is a non-refundable fee of $600.00 paid by the lender upon the filing of the Notice of Default (FM-1).

Requirements:

Before a lender can foreclose on a residential mortgage, it must mail to the property and last known address to each homeowner a completed copy of the Notice of Default (FM-1), and enclose the following items:

  1. Contact information through which the homeowner may reach an agent or representative of the lender who has authority to explain the mediation process;
  2. A recommendation that the homeowner seek housing counseling services;
  3. Contact information for at least one local HUD approved housing counseling agency;
  4. A description of all loss mitigation programs that the lender offers which may be applicable to the mortgage and the eligibility requirements for those programs;
  5. A Loss Mitigation Application for any available loss mitigation programs and instructions for completing and submitting the application;
  6. A Mediation Election form (FM-2) for opting into mediation; and
  7. An envelope addressed to the lender and an envelope addressed to the Mediation Administrator.

The lender must submit the original Notice of Default (FM-1) including all the above enclosures, a Lender Foreclosure Mediation Agent Contact form (FM-1AC), proof of the non-refundable fee and other required documents to the Mediation Administrator by electronic mail to DISB.mediation@dc.gov and send the original Notice of Default (FM-1) with the non-refundable fee regular first-class mail within two (2) business days of the date of mailing of the Notice of Default (FM-1). In addition, the lender must record with the Recorder of Deeds of the District of Columbia a copy of the Notice of Default (FM-1), excluding all the above enclosures except the Mediation Election form (FM-2), and any Supplement to the Notice of Default (FM-1), within ten (10) business days of the date of mailing of the Notice of Default (FM-1) unless good cause is shown to the Mediation Administrator.

If a homeowner does not elect to participate in mediation, a final mediation certificate will be issued to the lender within forty five (40) to sixty (60) days of the date of mailing of the Notice of Default (FM-1). 

If a homeowner elects to participate in mediation, the lender is required to participate. Accordingly, mediation must take place within ninety (90) days and conclude within one hundred eighty (180) days of the date of mailing of the Notice of Default (FM-1), unless the parties mutually consent to an extension of up to thirty (30) days. No matter how long the process, a lender may not exercise a power of sale until a final mediation certificate is issued by the Mediation Administrator.

Mediation Scheduling

Once a homeowner elects to participate in mediation by submitting the original, completed Mediation Election form (FM-2), the completed Loss Mitigation Application (FM-1LM), and the non-refundable fee of $50.00 to the Mediation Administrator, a Scheduling Notice will be sent by the Mediation Administrator to all mediation parties. The Scheduling Notice will contain the date, time and location of the mediation session, in addition to the contact information for the randomly assigned mediator.  Foreclosure mediation cannot exceed two (2) sessions, each three (3) hours in duration; unless the Mediation Administrator schedules another session if there is a reasonable likelihood the mediation parties will reach a settlement agreement.

In addition, the mediation parties may agree to extend mediation for an additional thirty (30) days beyond the one hundred eighty (180) day period by mutual consent by executing a Mediation Extension Form (FM-3EX).

A mediation party may cancel mediation at any time by filing a Cancellation of Mediation Form (FM-X1).  Upon the cancellation of mediation by all homeowners, the Mediation Administrator will cancel mediation and issue a mediation certificate to the lender.  Upon the cancellation of mediation by a lender, the Mediation Administrator will cancel the Notice of Default (FM-1) and mediation.

What to Bring to Mediation

Lenders (or representatives) must bring to mediation (and send an electronic copy five business days prior to mediation to the Mediation Administrator at DISB.mediation@dc.gov):

  1. An itemization of the amounts needed to cure and payoff the mortgage;
  2. Payment history records with respect to the mortgage, including all fees and costs;
  3. Results of the lender’s loss mitigation analysis including all NPV tests and data;
  4. Proof of consideration of foreclosure alternatives, including the data used in and the outcome of any calculation required by the regulations.

Modification Program or other loss mitigation standards; and any document to substantiate any claim by the lender that the homeowner is not eligible for a loss mitigation option available from the lender or to be presented during mediation.

Final Agreements

The parties may agree to modify a loan on a permanent basis or the homeowner may agree to relinquish the home. Any settlement agreement reached as a result of mediation must be reduced to writing and executed by the mediation parties within ten (10) business days of the date of agreement by the mediation parties.

If the homeowner fails to fulfill the obligations of the agreement, the lender may apply for a final mediation certificate by filing an Application for a Mediation Certificate Due to Breach (FM-10L).  If the lender fails to fulfill the obligations of the agreement, the homeowner may request the Mediation Administrator to issue an Order to Perform by filing an Application for Order to Perform due to Breach (FM-10B).

Penalties

A lender is subject to a minimum $500.00 civil penalty for failure, in person or through a representative to: (1) attend mediation; (2) bring any required document to mediation or send to the Mediation Administrator required documents five (5) business days prior to mediation; or (3) participate in good faith in mediation. By contrast, if a homeowner fails to act in good faith, e.g., attend mediation, etc., a final mediation certificate will be issued to the lender; after which, the lender may proceed with foreclosure. 

If a lender breaches the terms of a settlement agreement into which the parties enter after mediation, the lender must pay a $1,000.00 penalty and perform according to the terms of the agreement. If the homeowner breaches the terms of a settlement agreement, the lender may apply for a final mediation certificate, which may be issued within ten (10) days of receiving the request.

Appeal

If no agreement is reached in mediation, and a Preliminary Determination of Bad Faith is issued by the Mediation Administrator the lender may file an appeal in the District of Columbia Superior Court. The lender must copy the Mediation Administrator, and file the appeal no later than 30 days after the Preliminary Determination of Bad Faith is issued.

Final Mediation Certificate Request

The lender may request on Form FM-R1 a Final Mediation Certificate and must affirm that the borrower(s) has not filed a timely appeal. The lender may not request a Final Mediation Certificate until thirty (30) days after the Mediation Administrator issues the Preliminary Mediation Certificate.  The request for a Final Mediation Certificate must be sent to the Mediation Administrator. A lender must record a Final Mediation Certificate with the DC Recorder of Deeds prior to filing a Notice of Intention to Foreclosure on a residential mortgage.

What if a Party does not Speak English and Needs an Interpreter?

Homeowners may be entitled to free written translation and oral interpretation services when participating in the program.  Please contact the Foreclosure Mediation Administrator at (202) 442-7848 or DISB.mediation@dc.gov if you require language assistance.

Additional Information:

For more information about the Foreclosure Mediation Program please call the Foreclosure Mediation Administrator Ben Arnold at (202) 442-7848.