Saturday, November 12, 2011

Assessment Workgroup for the Managed Mediation Program for Residential Mortgage Foreclosure Cases Recommends Changes

Though Florida’s mandatory mortgage mediation programs have likely fared better in achieving work-outs than statistics indicate, an Assessment Workgroup for the Managed Mediation Program for Residential Mortgage Foreclosure Cases warns that a new wave of foreclosures will languish if additional resources are not provided to the courts. The group, created by Supreme Court Chief Justice studied results indicating that only 3.6 percent of eligible cases were actually settled in foreclosure mediation since December 2009 for homesteaded properties. Therefore, it is probable under the group's recommendations, that the mandate for a statewide managed mediation program will end, while allowing for circuits to opt in, under a potentially revised administrative order, to resolving cases in their own local programs. However, the group did say it was probably too early to conclude the mortgage mediation program was a failure and noted many difficulties were because lenders were reluctant to participate. “The public comments received provided evidence that servicers on a broad scale resisted providing representatives at mediation with full authority to settle and refused to consider more than a narrow range of settlement options, most of which were of little value to borrowers,” the report said. “Servicers had economic incentives not to settle and to keep foreclosure cases in limbo to avoid the expenses that accompany home ownership.” Apparently, a substantial number of cases apparently settled after an impasse was declared at mediation, probably because of the document exchange and counseling that occurred at mediation. This was evident in the Orange County program-- at least anecdotally-- and some permanent modifications were made after temporary agreements were reached at mediation, which is no longer an option, now that "no agreement" style orders are required. Pre-suit resolutions are also hard to develop data on to show success in lender - homeowner negotiations. Florida Bar News story: Read full report here: