Will the Mediation Act 2017 prevent house repossessions?

Jim Stafford

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The Mediation Act 2017 ("the Act") has now been passed into law.

Section 16 (1) states that:

16. (1) A court may, on the application of a party involved in proceedings, or of its own motion where it considers it appropriate having regard to all the circumstances of the case: (a) invite the parties to the proceedings to consider mediation as a means of attempting to resolve the dispute the subject of the proceedings; (b) provide the parties to the proceedings with information about the benefits of mediation to settle the dispute the subject of the proceedings.

We all know that some of the vulture funds have little interest in waiting 20 years for a mortgage to be paid back, and that they wish to see houses sold quickly.

Whilst the Court could "invite the parties to the proceedings to consider mediation as a means of attempting to resolve the dispute the subject of the proceedings" the Act is very clear that mediation is a voluntary process and both parties must agree to the process. Having said that, I could see some cases where the Courts could strongly suggest that mediation would be the way to go, particularly where the borrower can demonstrate that they can pay at least the market value of the house over a period of time.

The issue with mediation is that it is not necessarily a cheap process: Both parties have to jointly pay the mediator's costs. As with any adjudication type tribunal, the borrower could make a better case with professional assistance, which is also not cheap.

Mediation V/S Personal Insolvency Arrangement?
I believe that any bank or vulture fund would strongly object to being roped into a costly mediation process in respect of a house repossession.

In my view, if a borrower can demonstrate that they can pay a mortgage equivalent to the value of the current market value of the house, then that route is more likely to be achieved via a PIA, which the fund/bank would be less able to challenge.

Jim Stafford
 
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