The Arbitration Policy for Accredited Home Lenders

Loan agreement terms are presented at arbitration hearings.

Depending on the terms of the loan agreement, accredited home lenders may require mandatory arbitration. This means that disputes must be settled out of court. Arbitration is a procedure used to settle disagreements that involves the use of an independent third party. The arbitrator's decision is binding, meaning it's final and can't be appealed. The arbitration process involves finding an arbitrator, preparing for an arbitration hearing and conducting the hearing.

Deciding on the Arbitrators

There are usually three arbitrators assigned to each dispute. The borrower and the lender have the right to choose their own arbitrator; the two arbitrators then choose the third. Every state has different rules regarding who may be an arbitrator, but in general, only attorneys or law school graduates are allowed to seek certification. There are a number of organizations that provide referrals to experienced arbitrators in the mortgage industry loan field. Certain organizations also provide a list of cases on which the arbitrators have worked and their outcomes.

Arbitration Hearing Preparation

Both parties present their sides at the arbitration hearing. They need to gather evidence to support their cases. Hearings begin with opening statements, as they do in court, so the parties need to prepare them ahead of time. The opening statements provide an overview of the case, a description of the problem and all pertinent facts and tell arbitrators what they hope to achieve. The opening statements should be clear and concise and tell a coherent story that arbitrators can easily understand.

Arbitration Hearing

State law dictates how to carry out arbitration hearings. The hearing is usually held in a governmental office in the county in which the borrower lives. The arbitrators come to the hearing knowing nothing about the case. Both parties begin with their opening statements to explain why they're there and to request a resolution for the dispute. They present documents, witnesses and other evidence to support their sides. Arbitrators act like judges in that they listen to each side and make a decision.

Considerations

Accredited home lenders prefer arbitration to going to court because they're designed to be less complicated, cheaper and faster. It's much more inexpensive to hire an arbitrator than a lawyer. There are no formal rules for presenting evidence or conducting procedures. The hearings are set up to be as easy as possible for both parties. The arbitrator's ruling is given orally or in written form and includes a summary of the issues and facts, as well as the resolution.

References

• LawInfo: What Is an Arbitration Hearing?
• UWUA: Arbitration --- Preparing Effective Opening Statements