Navigating the Maine Foreclosure Diversion Program (FDP): Mediation Strategies

When a bank files a foreclosure lawsuit against you in Maine, the state courts step in to ensure you are not steamrolled by a massive financial institution. Under 14 M.R.S. § 6321-A, Maine mandates that all owner-occupied residential foreclosure cases be offered a spot in the Foreclosure Diversion Program (FDP). This program pauses the litigation and forces the bank's lawyers to sit down with you and a neutral court mediator to explore alternatives to foreclosure.

For residents in Saco, Auburn, and Waterville, the FDP is a powerful lifeline, but it is not an automatic fix. Mediation requires intense preparation. If you show up without your tax documents or fail to understand the bank's modification formulas, you will leave empty-handed. Finding a local Maine foreclosure attorney through our directory will ensure you have a professional advocate in the mediation room, turning the tables on aggressive mortgage servicers.

The FDP Process in Maine District Courts

The rules governing this program are established by Me. R. Civ. P. 93. The process is strict, and failing to follow the timeline will result in you being kicked out of the program.

Step 1: Opting Into the Program

When you are served with foreclosure papers, you will receive a one-page form offering mediation. You must file Form FDP-01, Maine, Judicial Branch, Response to Complaint and Request for Mediation within 20 days. Do not miss this deadline. Once filed, the court temporarily freezes the bank's lawsuit and schedules an informational session.

Step 2: Preparing Your Financial Packet

The mediator will require you to submit a massive financial packet to the bank prior to the first mediation date. This is the most crucial step. You must gather your last two years of tax returns, 60 days of pay stubs, two months of bank statements, a detailed household budget, and a hardship letter. If you fail to submit even one document, the bank will claim your application is "incomplete" and refuse to negotiate.

Step 3: Attending the Mediation Session

Mediation takes place at a local court, such as the Lewiston District Court, Lewiston. A neutral mediator, employed by the state, facilitates the meeting. You, your lawyer, and the bank's attorney will attend. The bank is required to have someone with actual authority to approve a loan modification available on the phone.

What to Do If the Servicer Fails to Mediate in Good Faith

Banks are notorious for dragging their feet, claiming they "lost" your faxed documents, or sending representatives who have zero authority to negotiate. Maine law does not tolerate this. If the servicer acts in bad faith, your lawyer can ask the judge to sanction the bank. As seen in the landmark case U.S. Bank Nat'l Ass'n v. Sawyer, 95 A.3d 608 (ME Supreme Judicial Court 2014), Maine courts have the authority to dismiss the foreclosure entirely or wipe out the interest on the loan if the bank fails to mediate in good faith under Rule 93.

Negotiating Loan Modifications vs. Deed in Lieu

The ultimate goal of mediation is to find a solution that works for both parties. Your attorney will help you aim for the right target.

• Loan Modification: This is the ideal outcome if you want to stay in your home. The bank agrees to take your missed payments, add them to the back of the loan, and potentially lower your interest rate to create an affordable monthly payment.
• Deed in Lieu of Foreclosure: If you cannot afford the home anymore, your lawyer will negotiate a Deed in Lieu. You voluntarily give the house back to the bank, and in exchange, they agree not to sue you for any deficiency balance (the difference between what the house sells for and what you owe). They may even offer you "cash for keys" to help with moving expenses.

The Importance of Never Missing a Date

The FDP is a privilege, not a right. If the court schedules a mediation date at the Portland District Court, Portland and you fail to show up without prior court approval, the mediator will file a report of non-compliance. The judge will immediately lift the stay on the litigation, and the bank will fast-track the foreclosure against you. You must treat these dates as absolute mandates.

How Much Does FDP Mediation Cost in Maine?

Participating in the state's program is financially accessible.

Frequently Asked Questions (FAQ)