March 4, 2014
by Andrew Nelson
Pierce & Associates, P.C. – USFN Member (Illinois)
One of the advantages of mediation is that when conducted appropriately, it creates an open forum for the parties to freely communicate to reach a mutually-beneficial alternative to foreclosure when possible. The goals and structure of mediation vastly differ from the objectives and procedures of litigation. Therefore, the two courses of action should remain separate. However, the St. Clair County mediation rules attempt to merge the two processes together to the detriment of fairness and efficacy.
Pursuant to the St. Clair County foreclosure mediation program (FMP) rules, “unless ordered by the court, no discovery shall take place until after the mediation is complete.” However Section 4 of the rules violates the aforementioned aspect of the program by essentially commanding unilateral discovery requests of the plaintiffs, imposing an onerous and undue burden on plaintiffs to produce documentation that contravenes the purpose of mediation and rises to the level of litigation.
Section 4 of the FMP rules requires lender representatives to provide the following extensive list of documents at the first pre-mediation conference:
Proof of the plaintiff’s standing to file the foreclosure
- Proof of the mortgage holder’s standing and status as the real party in interest
- Any pooling and servicing agreement
- Loan origination documents
- The appraisal at the time of the loan origination and any subsequent appraisal
- Payment history records with respect to the mortgage, including all fees and costs incurred
- An itemization of the amounts needed to cure and payoff the mortgage
- The lender’s current loan modification packet
This author’s firm suggests that an objection is appropriate to several of the aforementioned documentation requirements because the requisites are unreasonable and burdensome within the context of a mediation program.
Proof of the Plaintiff’s Standing to File the Foreclosure Complaint
The St. Clair County foreclosure mediation program is an opt-in one. Defendants receive a mediation program notice and a foreclosure mediation request form along with their summons. Defendants must execute the mediation request form if they wish to participate in mediation. Therefore, the defendants cannot challenge the plaintiff’s standing to foreclose while simultaneously seeking mediation with the same plaintiff.
Proof of the Mortgage Holder’s Standing & Status; PSAs; Loan Origination Docs; Appraisals
The concern with the above-listed items 2, 3, 4, and 5 is that they constitute discovery requests. Court rules and Illinois Rules of Evidence govern the discovery procedure, which would be circumvented by the demands of this foreclosure mediation program. Requiring plaintiffs to produce these documents without adhering to the formality of discovery requests and without the plaintiffs’ ability to object, overextends the scope and function of the mediation program. Moreover, a plaintiff’s failure to provide these items exposes it to undue liability for failing to participate in good faith. Accordingly, this author’s firm recommends considering an objection to the production of these items as a violation of the foreclosure stay, which is to remain in effect throughout mediation.
Any challenges to the mortgage holder’s standing or to the terms of a pooling and servicing agreement are not appropriate for a mediation setting, as there is no decision maker present to resolve the dispute. Mediators must remain neutral and impartial. Therefore, these types of issues are to be addressed within the established framework of litigation in compliance with the Illinois Rules of Civil Procedure.
Notwithstanding that Section 4 of these FMP rules is excessively broad and obfuscates the role of the mediation process, this author’s firm remains committed to mediating in good faith. However, appropriate objections should be considered in each case.
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