Mediation is anÂ effective way to resolve disputes.Â Florida Courts requireÂ the parties to a lawsuitÂ toÂ attempt to settle the dispute at mediationÂ before the trial starts.Â Â There are many benefits to mediation -Â it isÂ private,Â the proceedings are confidential, ifÂ successful it reduces the costsÂ to each side of the case andÂ enables the parties toÂ “think outside the box”.Â Â The mediator is a neutral third party (in Florida they must be licensed) that facilitates the discussion and helps the parties explore alternative ways of resolving their dispute.Â Â In short, mediation has a lot of benefits and I highly recommend it for the vast majority of cases.
The Florida SupremeÂ Court mandatedÂ mediation for all circuit court residential mortgage foreclosure cases involving homestead property.Â The Florida Supreme Court initiated a task force review of foreclosure casesÂ in 2009Â and the findings were notÂ surprising, at least not toÂ community associationÂ board members dealing with delinquencies.Â The task force recommended mediationÂ to manage “the massive volume of residential mortgage foreclosure cases”.Â Â Â
Mediation increases costs for the mortgagee (at least $750 for the program plus attorney’s fees), delays the process and may actually work against the borrower that participates in the programÂ in the long run.
First, the program coordinator must contact the borrower.Â The borrowers typically don’t respond, so a second notice is sent and sometimes even a third notice is sent.Â That all takes time.Â Once contact is established the borrower must meet with an approved mortgage foreclosure counselor,Â that takesÂ more time.Â Â Then the borrower must assembleÂ and provide certain financial information to the mediation program coordinator before mediation will be scheduled.Â
“Pro-se” borrowers (borrowers without legal counsel)Â often are not aware they may request documents from the mortgagee, such as:
- Evidence it owns and holdsÂ the note and mortgage sued upon;
- An accountÂ history showing the application of all payments by the borrower during the life of the loan;
- The mortgagee’s determination of present net value of the mortgage loan; and
- The most current appraisal of the property.
AÂ reporter forÂ the Palm Beach Post foundÂ foreclosure mediation only had a 6% success rate.Â The article quotes a reportÂ indicatingÂ programÂ coordinators established contact withÂ less than half of the borrowers that qualified for the program.Â Less than half of those borrowers actually participated inÂ mediation.Â All of thisÂ must take place before the Court will actÂ on anyÂ notice for trial, motion for default final judgment, or motion for summary judgment filed in the case.Â
Fannie Mae recently announced its plan forÂ pre-litigation mediation in Florida.Â Fannie Mae requires mortgageÂ servicersÂ to referÂ delinquent mortgage loans to one of its approved attorneys along withÂ contact information for a primary liaison/team that can make decisions regarding loan modifications or other avenues for resolution of the delinquency.Â Â If the circumstances meet Fannie Mae’s mediation requirements, the servicer must offer mediationÂ to the borrower.Â Â It can fine servicers for failing to comply with the program.
Will pre-litigation mediation speed up the foreclosure process or produce even longer delays?Â Its hard to predict, but borrowers that have encountered difficulties contacting anyone at the lender or mortgage servicer now at least have another chance to save their home or negotiate a solution.