Vermont Enacts Mediation Requirement for Foreclosures

On May 29, Vermont Governor Jim Douglas signed HB 590, a bill establishing a mediation program for mortgage foreclosure actions involving loans subject to federal Home Affordable Modification Program (HAMP) guidelines. The law requires a court to refer a foreclosure case to mediation whenever the mortgagor enters an appearance or requests mediation within four months after judgment is entered. The court may, for good cause, shorten the four month period or, alternatively, decline to order mediation upon finding that the mortgagor is attempting to delay the case. Mediation is not required if the mortgagee files a motion detailing its compliance with the applicable HAMP requirements. During the mediation period, the law requires the mortgagee to consider available foreclosure preventions tools, “including reinstatement, loan modification, forbearance, and short sale, and the calculations, assumptions, and forms established by the HAMP guidelines.” A mortgagee must produce documentation of its consideration of these options, as well as any pooling or servicing agreements, if applicable, to the mortgagor. The cited provisions take effect July 1, 2010.