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Despite efforts of the South Carolina Supreme Court, mortgage foreclosures remain high.

According to CoreLogic, 3.7% of the homes in South Carolina are in the foreclosure process.1  RealtyTrac’s data shows that approximately 2,000 homes go into foreclosure each month in the Palmetto State.2  The problem facing S.C. is clear, mortgage foreclosures continue to rise, and as mortgage foreclosures continue to rise, home values continue to decrease or remain stagnant.  The question becomes “How do we fix it?”

On March 23, 2012, Resolved: Journal of Alternative Dispute Resolution in cooperation with the Center for Dispute Resolution at the Charleston School of Law a symposium focused on foreclosure dispute resolution.3  One of the topics that will be addressed in the focus of today’s post: Foreclosure Mediation.

In his April 2011 Issue Brief for the Center of American Progress, Alon Cohen, Housing Policy Advisor, lays out a compelling argument as to why more states should adopt foreclosure mediation programs.4  According to Cohen, foreclosure mediation represents:

a last, best chance for the homeowner and mortgage lender or mortgage servicer to sit down in the presence of a neutral third party who understands the foreclosure and loan modification processes and determines whether there is any deal that nets both sides greater value than would foreclosure.

What is foreclosure mediation?

To answer that question, we need to define both terms separately.


Foreclosure is “a specific legal process where a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.”5  In the case of mortgage foreclosure, the collateral is real property.

So here is what happens, when a homeowner buys a home he often borrows the money to purchase the home from a lending institution, like a bank.  When the homeowner borrows the money, he signs a note promising to pay the bank back.  He also signs a mortgage which allows to bank to take possession of the home, sale it and keep the proceeds if the homeowner fails to make payments as called for in the note.  It is important to remember the note and mortgage are two separate documents; the note is a promise to pay, the mortgage grants the lender the right to foreclose on the property if payments aren’t made on the note.


Mediation is “is a form of alternative dispute resolution (ADR), a way of resolving disputes between two or more parties. A third party, the mediator, assists the parties to negotiate their own settlement (facilitative mediation). In some cases, mediators may express a view on what might be a fair or reasonable settlement, generally where all the parties agree that the mediator may do so (evaluative mediation).”6

So, foreclosure mediation is a form of alternative dispute resolution where a mediator assists Borrowers and Lenders in negotiating their own settlement.

Why Foreclosure Mediation?

Because it works.  According to Cohen, “[a]utomatic mediation programs in Philadelphia and Connecticut see thousands of homeowners a year and continue to see settlement rates near 75 percent. New programs are ramping up in their numbers, with states such as Nevada, whose program started July 1, 2010, also seeing settlement rates near one-half. Mature programs see settlement rates of 75 percent.”

Previously, the South Carolina Supreme Court has recognized the benefit of Alternative Dispute Resolution (ADR).  The South Carolina Supreme Court Rules currently mandate ADR of all civil cases in several counties, however, mortgage foreclosures are exempt from this ADR requirement.


S.C. is yet to join a number of states requiring mediation in all foreclosure actions.  Until such time, homeowners facing foreclosure are required to defend themselves in legal proceedings.  The Law Office of Marcus W. Meetze, LLC is here to help.   Contact us at 864-271-3555 or to schedule a consultation today.

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