State’s top court orders foreclosure mediation program

MANATEE — Florida will create a state-wide “managed mediation” program designed to help more homeowners avoid foreclosure, the state’s top court said Monday.

The Florida Supreme Court directed judges to refer all new foreclosure cases involving primary residences to mediation, in hopes of easing a glut of foreclosures that is clogging the court system. More than 456,000 foreclosure cases currently are pending in Florida, which has the nation’s highest foreclosure rate.

“The crisis continues unabated,” said the 10-page order signed by Chief Justice Peggy Quince, which adopted most of the recommendations of a task force that included Manatee County’s top judge.

The order directs the chief judges of Florida’s 20 judicial circuits to issue administrative orders implementing the mediation requirement, but doesn’t set a deadline for doing so. It probably won’t be in place locally until spring at the earliest, 12th Judicial Circuit Chief Judge Lee Haworth said.

“We’re going to have several challenges in getting this thing implemented quickly,” he said. “It’s not going to happen overnight.”

In mediation, a neutral outside party tries to get both sides in a case to reach a settlement.

The mediation requirement will apply only to foreclosure cases filed after the local order is issued and on loans involving a borrower’s primary residence that were originated under federal truth-in-lending regulations. The requirement can be waived if the lender and borrower both agree to opt out or pre-suit mediation had been conducted.

To be eligible for mediation, homeowners must first see a foreclosure counselor who is certified by the U.S. Department of Housing and Urban Development. Homeowners who undergo such counseling are less likely to re-default on their mortgages, the task force said.

The mediation must be scheduled between two and four months after the foreclosure suit is filed. Lenders or mortgage servicers will pay the cost, which the order capped at $750, but can seek to recover it through a foreclosure judgment if mediation is unsuccessful.

“Requiring borrowers to pay a portion of mediation up front would operate as a barrier to this court’s goal of efficiently managing these cases to avoid waste of judicial and party resources,” the order said.

Tenants also can opt into the mediation program, but would have to split the cost with the lender or servicer.

The mediators must be non-profit organizations that are “independent of the judicial branch, capable of sustained operation without fiscal impact to the courts, politically and professionally neutral, and have a demonstrated ability to efficiently manage the extremely high volume of foreclosure actions,” the high court’s order said.

Haworth said that could make it difficult to implement the program quickly in his district, which covers Manatee, Sarasota and DeSoto counties. A requirement that an authorized representative of the lender or servicer participate in the mediation sessions also could delay implementation, he said.

“I’m anticipating the servicers are going to say, ‘We’ve got to hire and train people,’” Haworth said, adding he thought the high court’s goal of resolving foreclosure cases more quickly was “laudable.”

The high court’s order also requires lenders to prove they hold the promissory note, and orders the creation of a statewide reporting system to collect data on mediation outcomes.

Duane Marsteller, transportation/growth and development reporter, can be reached at 745-7080, ext. 2630.