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Task force urges foreclosure mediation

MANATEE — Florida should require mediation between mortgage lenders and borrowers to help courts better manage the crush of foreclosure cases and improve borrowers’ chances of keeping their homes, a judicial task force is recommending.

The state also should standardize some court forms and create a foreclosure clearinghouse on the Internet, the panel said in a final report submitted to the Florida Supreme Court on Monday. The report is posted at www. floridasupremecourt.org

“This is a great opportunity for the courts to make substantial improvements in the way these cases are handled,” said 12th Judicial Circuit Chief Judge Lee Haworth, one of the task force’s 15 members.

Chief Justice Peggy A. Quince created the task force in March to recommend better ways for the court system to handle the flood of foreclosures, which have risen by 631 percent in Haworth’s district — Manatee, Sarasota and DeSoto counties — since 2006.

The biggest change would be the creation of a statewide “managed mediation program” that would be conducted through neutral, nonprofit third parties who would be paid for their services.

The program would apply only in foreclosure suits 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 was filed.

Also, borrowers could opt out of mediation at any time.

Before the mediation conference, borrowers would have to meet with a HUD-certified mortgage foreclosure counselor and provide detailed information about their personal finances.

That information would be forwarded to the lender or servicer, who in turn would be required to give borrowers detailed information about their loans such as payment and service histories.

The hope is that the mediation manager would facilitate a mutual agreement that avoids foreclosure. As many as 100,000 foreclosure cases could be eligible for the program, the report estimated.

The task force did not say how much mediation would cost, but said lenders should foot the entire bill — a recommendation that exposed a division on the panel.

In a dissenting report, Haworth — joined by a circuit judge, a lawyer and a banker — argued 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.

Otherwise, borrowers will view mediation “as an opportunity to delay the inevitable,” they said in their report.

The task force also said court clerks could improve case management by dividing foreclosure cases into three tracks: 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.

The task force also said the state should:

n Set up a Web site to act as a clearinghouse of foreclosure-related information for the general public.

“We need a ‘myfloridaforeclosure.com’ for our citizens,” the report said.

n Require lenders to tell the court why they want a foreclosure sale canceled and rescheduled.

n Require process servers to ask tenants if they know where the homeowner is, something that is not done now.

After a 45-day public comment period, the state Supreme Court can either accept or reject the recommendations, send the report back to the task force for modification, or not act at all.

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