Not too long ago, a homeowner faced nearly insurmountable odds if he or she were trying to obtain a loan modification or a short sale while, at the same time, attempting to stave off a foreclosure sale. The homeowner had to fight battles on two fronts. Although the “arms” of larger banks still do not coordinate very well, Kentucky foreclosure alternative dispute resolution (“ADR”) programs are now at least forcing mortgage holders into a room with homeowners to discuss ways to avoid a foreclosure sale. For some time now, Jefferson circuit (Louisville) and Franklin circuit (Frankfort) courts have implemented formal ADR programs in foreclosure actions. The practice is spreading. Fayette circuit court (Lexington) is now following the trend – most, if not all, its divisions have some version of “conciliation conferences” in foreclosure cases.
While not a “quick fix” for the problems that precipitated a foreclosure action, foreclosure ADR can serve several purposes for a homeowner facing foreclosure. If the homeowner’s goal is to remain in the home, foreclosure ADR could provide the perfect opportunity for a review of the homeowner’s “retention” options, such as forbearance or loan modification. If the goal is a short sale or other “non-retention” option, foreclosure ADR can provide the breathing room necessary to find a buyer or otherwise negotiate with the mortgage holder. When a foreclosure action is filed, first check to see if foreclosure ADR is available in that circuit. If so, use it. It might just work for you.