Florida's Fix: Can 'Managed Mediation' Stem Foreclosures?

Foreclosure MediationSo clogged is Florida’s legal system with nearly half a million pending foreclosures that the state’s Supreme Court has issued an order requiring managed mediation programs to speed up the stalled cases.
Chief Justice Peggy Quince issued the order to address the state’s unabated foreclosure crisis, supporting a recommendation from a court-appointed task force.
Florida has the third-highest mortgage delinquency rate in the nation – after California and Nevada – with an estimated 456,000 pending foreclosure cases.
The mediation program is not a new concept for the Sunshine State. Some circuit courts have already started the practice which requires a nonprofit organization to conduct the mediation at a cost to the plaintiff.
An explanation of the court required mediation program is normally explained to the homeowner along with a foreclosure summons. Mediation fees of up to $750 are paid by the plaintiff. Between 60 and 120 days later, a mediation session between the borrower and lender is scheduled. If mediation is successful, the case is settled. If there is no resolution, the case proceeds to court litigation.
However, “managed mediation” is not necessarily a ticket to a loan modification that will keep distressed borrowers in their homes, mediators warn.
In many cases, real estate attorney say, a homeowner’s finances are basically reviewed by a lender to determine whether the borrower’s debt-to-income ratio can qualify for a loan modification. Mediators are not advocates for the homeowner, they say. 
“Mediators are not supposed to advise, they may ask probing questions, but it’s a slippery slope,” Fort Lauderdale real estate attorney and foreclosure mediator Shari Olefson told the Palm Beach Post. “This isn’t really a mediation. It’s like a meeting with a baby sitter there.”
Nonetheless, the rate of cases that are settled in mediation is up to 75 percent. And such programs normally succeed in their judicial mission of unclogging court dockets.
“You want to get the cases that are going to settle to settle early before they use up a lot of judicial resources,” said Miami-Dade Circuit Court Judge Jennifer Bailey, who was on the task force that recommended mandatory mediation. “The dysfunction has been an inability to communicate between the borrower and the lender.”

4 thoughts on “Florida's Fix: Can 'Managed Mediation' Stem Foreclosures?

  • January 2, 2010 at 5:47 pm

    Loan Modification via Loan Modification Firm VS Total Mortgage Reset With Homeowner Protection Group
    Loan Modification With Loan Modification Firm
    •Lenders have mastered the Pretend and Extend game prolonging the outcome for months and months for seemingly no reason
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    •Principal reductions are extremely rare with loan modifications
    •Lender will require homeowner to defend and disclose every aspect of their financial life
    •Even with a successful modification a majority of homeowners will still be upside down (owe more than properties value)
    •The proof of financial hardship is an absolute necessity with any loan modification
    •In most cases a loan modification will lower your mortgage payment for the agreed upon fee and nothing more
    •If the lender’s workout offer does not truly help the homeowner, the loan modification is all but dead
    •Throughout the process to obtain a loan modification the homeowner is at the lender’s mercy
    •Modifications typically take 6-8 months or more
    •Arrearages may or may not be eliminated (in most cases they are moved to the back of the loan)
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    •By law, lenders must respond and work on a resolution within 60-90 days
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    •Lenders are required to defend their business practices; giving the homeowner the upper hand
    •HPG negotiates principal balance in such a way so that the overwhelming majority of clients who are currently upside down will have a new loan balance that is equal to or below appraised value
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  • March 17, 2010 at 3:52 am

    I just hope that The Florida Consumer Protection and Homeowner Credit Rehabilitation Act is passed by the legislature soon. What is there to mediate in these cases anyway – borrower signs contract with lender to pay back loan If borrower defaults on payments lender receives the property that was put up for compensation to lender. Why not instead of mediation we have the defaulting borrowers be required to take courses in Contract Law, Tort Law, and Financial management.
    And as for the Florida Consumer Protection and Homeowner Credit Rehabilitation Act Let’s look at the facts – 37 States allow for non-judicial foreclosures. The voters of those states have not revolted at the polls or taken to the streets in protest for this. What I am surprised about is the Florida Bankers Association is only now pushing this bill when it should have (in my opinion) been put in 2-3 years ago when Florida started leading in foreclosures along with several other states. I am also very surprised that we have not heard more complaints from the Clerks of the Circuit Courts and Judges who are over booked when it comes to the foreclosure cases in Florida I live in a county where there are about 100 foreclosures filed every week and it can take anywhere from 3 to 9 months just for a foreclosure hearing! This is absurd. Another thing that is absurd is that the Judicial process in Florida has allowed tens of thousands of defaulting borrowers to live in their homes for as many as 18 months rent free before being thrown out.

  • June 21, 2010 at 3:46 pm

    So, I had a succesfull business for over 5 years was paying my house payment on time never missed for 8 of those 5 years. in 18 years never more than 30 days late 3 times on ALL of my debt and those were credit cards.
    On my house, never missed or even late in 18 years of home ownership. Then due to a bad decision I lost my company and went back to work “for the man” making a 1/3 of what I was making not only for over 5 years but almost 1/2 of what I was making before that.
    I am in foreclosure due to situations beyond my control.
    I feel this is why we have the system. My mortgage company said they would work with me on modifyng my loan. There ONLY position was – I give them $10,000 sign an agreement form THEN they would tell me what my new loan amount, interest and payment would be AFTER the modification.
    This is a dumb business decision on my part all the way around. They flat refused to discuss ANYTHING about what I was agreeing to until after I signed the paperwork AND gave them $10,000.
    Does this sound right to you?

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