And the Foreclosure Beat Goes On - Florida Task Force Recommends Mandatory Mediation

The residential task force set up by members of the Florida Supreme Court and others to review current foreclosure guidelines used by Florida courts recommended Monday that all cases involving "primary homesteaded foreclosure homes" should be subject to mandatory managed mediation. In addition, the 15-member panel also said that judges should expedite cases dealing with vacant or abandoned properties.

According to the task force, Florida should require mediation between lenders and borrowers to help the courts better manage the crush of foreclosure cases and improve the borrowers' chances of keeping their home. Other recommendations included having the state standardize some court required forms, creating a foreclosure clearinghouse on the Web and making borrowers undergo financial counseling before mediation because they "suffer from a significant imbalance of power when negotiating with their note-holders." The task force wrote that research shows "borrowers are less likely to default again if they've been through foreclosure counseling."

If the Supreme Court justices adopt the new "managed mediation program" recommendation, the following guidelines would apply to the foreclosure process in Florida:

• Mediation would be conducted through neutral, nonprofit third parties. Naturally, they will be paid for their services.
• The program would apply only in foreclosures against homesteaded property involving loans originated under federal truth-in-lending regulations.
• Such cases automatically would be referred to mediation, unless the lender and borrower agree to waive it and/or have already conducted mediation before the suit is filed. And, borrowers can opt out of mediation at any time. How apropos!
• Before the mediation conference is held, borrowers would have to meet with a HUD-certified mortgage foreclosure counselor and provide detailed information about their personal finances. That information would then be given to the lender or servicer, who in turn would be required to give borrowers detailed information about their loans payment and service histories.
• The panel also recommended that while they do not know how much mediation will cost, lenders should foot the entire bill. However, this criterion was not made by a unanimous decision. Dissenting panel members recommended that lenders won’t be able to afford to pay for tens of thousands of mediations and that non-indigent borrowers should pay half the cost as a matter of fairness.
• The task force also said court clerks could improve case management by dividing foreclosures into three categories: Those against homesteaded residences, those involving vacant or abandoned homes and others such as those in which someone other than the borrower lives in the residence. Foreclosure cases against vacant and abandoned homes would be expedited, while the third category could be handled normally or referred to mediation with both sides splitting the cost.

Chief Justice Peggy A. Quince, who helped create the task force, said the panel's hope is that "the managed mediation program would facilitate a mutual agreement between the parties that helps halt the foreclosure process." In addition, the panel estimated as many as 100,000 foreclosure cases could be eligible for the new program, if it is adopted.

The report has been sent to the justices and after a 45 day public comment period, the state Supreme Court can accept or reject the recommendations, send the report back to the task force for modification, or not act at all.

Our first thoughts on this report's recommendations were "when is this nanny state mentality ever going to stop." With all the preceding dismal failures that have resulted by the government trying to "help folks stay in their homes" during the housing crisis, another mandatory program will just delay the process and still result in the same outcome - folks who can't afford to stay in their homes are going to wind up in foreclosure. Is this what we want to see happen? The answer is no, but once the inevitable happens, prolonging the process won't help cure the problem either.

Gulf Coast Associates, Realtors specializes in upscale Florida real estate in and around Cape Coral and Ft. Myers. Our sister firm, Metro Mortgage Company, specializes in originating Florida home loans including Conventional, Jumbo and FHA/VA mortgages. Contact us today at 888-617-3674.

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