As a mediator who offers alternative dispute resolution, or mediation, I’m preparing an upcoming mediation that involves a lender going after the borrower for loan fraud. The law suit has been filed and I was chosen by the California Superior Court to act as a mediator.

The attorney representing the bank wants $80,000 in damages and is asking for the court to award punitive damages. The borrower denies the loan fraud and states that they completed the loan application in good faith without making false statements. The borrower provided tax returns, financial statements, and was approved for the loan.

We all read about the amount of foreclosures that are occurring. We have read about lenders going through with foreclosures and not being prudent in the foreclosure process such as robo signing.

Is this law suit a new trend?

As a mediator, it is clear from this dispute that there are two strong positions. How does one compromise when the home may be lost in foreclosure and the buyer has few assets?

What is the cost of a trial if a settlement does not occur? What about delays of five years in civil disputes due to California’s present budget. I’m confident that mediation will be kinder to the parties, versus continued litigation and in this case trial has been set for April 2012. I look forward to acting as the neutral in this dispute and working with the attorneys involved in the suit. I’m confident that mediation can play a large role towards a settlement.

by Jim Hildreth

Jim W Hildreth is a California mediator who mediates in the courts and in the private sector. He is based in Oakland & Sonora, CA.