There are two types of foreclosure mediation programs: opt-in, which means you have to initiate the mediation process, and automatically scheduled, often referred to as mandatory mediation. If you live in California, Connecticut, Florida, New York, Pennsylvania, or Rhode Island, you won't have to make any special effort to begin mediation; lenders are not allowed to foreclose until you have gone through some state-ordered negotiation with your servicer.

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States that require action on your part include Delaware, Hawaii, Illinois, Indiana, Kentucky, Maryland, Maine, Michigan, Nevada, New Hampshire, New Jersey, New Mexico, Ohio, Oregon, and Wisconsin.

States not mentioned do not yet provide government-sponsored mortgage foreclosure mediation.

How does foreclosure mediation work?

States differ in how their programs work. I'll describe one opt-in program and one mandatory program here, and in the next post I'll provide links to each state's programs so you can look up your state's offerings.

New Jersey is an opt-in state and it's program works within the following guidelines:

Lenders are required to service information and instructions about the program to homeowners at the time the summons and complaint for foreclosure is served. A second notice describing a mediation program is mailed to the homeowner 60 days thereafter by the Administrative Office of the Courts. Still further, the lender must serve a notice of mediation attached to the request for the entry of judgment. So for a foreclosure to be valid, you must be notified of your right to mediation. Don't ignore this benefit -- it might save your home.

You get access to housing counselors, attorneys and court-trained mediators who work to try to resolve foreclosure actions by proposing work-out and payment arrangements that accommodate your circumstances and and your lender's.

Connecticut is a mandatory mediation state. It's program works like this.

The Foreclosure Mediation Program has been set up to assist you if you have a 1, 2, 3 or 4 family owner-occupied home in foreclosure. It must be located in the state of Connecticut and be your primary residence. You meet with a mediator and the lender to try and reach an agreement.

The program was recently changed from opt-in to mandatory, and has been quite successful, with 60% of participants avoiding foreclosure. Mediators are Judicial Branch employees trained in both foreclosure law and mediation. In addition, the independent mediators understand the different community-based resources and mortgage assistance programs that borrowers may be eligible for.In addition, Connecticut does not allow foreclosure until homeowners have been evaluated for HAMP relief.

Check with your local government as well.

Even in states without foreclosure mediation programs, some towns and counties have instituted their own plans. Don't let your home be foreclosed on without exploring all options.