Borrower's Perspective

Mediation can be a very effective way to resolve disputes between homeowner borrowers and lenders.  Based upon my knowledge and experience mediating and litigating these disputes, I believe mediation of them makes great sense.  This article looks at mediating these disputes from the borrowers' perspective.

Cost effective

Mediation is much less expensive than litigating through to judgment.  Expert witness fees and discovery costs often will exceed the borrowers' share of a mediator's fee.

Borrower emotions

Borrowers' disputes with lenders, particularly those involving pending or threatened foreclosures, evoke very powerful emotions that can interfere seriously with rational negotiation.  Many borrowers are angry for being deceived or mistreated, fearful of losing their home, distrustful of the lender's agents and employees and embarrassed about public knowledge of their plight.  These emotions would hamper anyone attempting to deal with difficult issues.  A mediator can recognize these emotions, help borrowers deal with them and enable borrowers to make better decisions.

A forum in which to be heard

Borrowers, like most other disputants, are much more likely to "buy into" a resolution if they are given an opportunity in the non-binding, non-threatening mediation context to talk about their concerns and feelings to someone who is genuinely interested in what they have to say.

Borrower confusion

Most members of the public are bewildered by the home loan process and business.  A mediator with substantive knowledge of the mortgage banking business can help borrowers understand the business and better communicate their concerns and claims in a facilitative and/or evaluative mode.

Borrower interests

Borrowers involved in disputes with lenders have interests that may include:

A mediator can help borrowers recognize the interplay of these and other interests and the extent to which a proposed resolution meets them in whole or in part.  The benefits of this approach include a significantly reduced possibility of impasse caused by solely position (money) based bargaining and greater borrower satisifaction with a resolution.

A need for some homework

Where a loan re-write or modification may be part of the resolution, it is helpful if the borrowers survey currently available rates and terms before the mediation session.  That way, they will have a better understanding of how good or bad any proposed re-write or modification is.

Timing of the mediation

In general, it probably is better for borrowers to mediate sooner rather than later.  The longer the litigation runs, the more the costs and frustrations mount.  Prolonged litigation may cause the lender to take its chance at disposing of the case on summary judgment.


Mediation offers borrowers an effective process for obtaining resolutions of their disputes with lenders that better satisfy the borrowers' needs and interests.

© Copyright 2007, Robert H. Logan. All Rights Reserved

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