THE NEWS SERVICE OF FLORIDA: Supreme Court orders mediation in foreclosure cases

THE NEWS SERVICE OF FLORIDA published this article on December 28, 2009

THE CAPITAL, TALLAHASSEE, Dec. 28, 2009…..The Florida Supreme Court on Monday ordered local judges to adopt a uniform mediation program for foreclosure cases and other interventions to deal with the tide of foreclosure cases clogging the courts.

Chief Justice Peggy Quince agreed with the court’s Task Force on Residential Mortgage Foreclosure Cases, which earlier this year recommended the program, and ordered its adoption. Quince’s order sets out a model administrative order to be issued by chief judges in each circuit, under which all foreclosure cases in state court that involve residential homesteaded property will be referred to mediation unless the plaintiff and the borrower agree to skip the step, or the borrower refuses to participate.

If the parties have already gone to pre-suit mediation that “substantially complies” with the mediation program requirements, they wouldn’t be expected to go through it again under the order. The cost would be paid by the lender bringing suit.

In addition to mediation, the order also calls for pre-mediation foreclosure counseling and early exchange of borrower and lender information prior to mediation.

“The court approves this recommendation as the best method to open communication and facilitate problem-solving between the parties to foreclosure cases while conserving limited judicial resources,” Quince wrote in her order.

Foreclosure case filings in Florida trial courts stood at nearly 369,000 at the end of 2008, the court noted, and at the beginning of the final quarter of 2009 were much lower, but still just over 296,000.

“Florida has the third highest mortgage delinquency rate, the worst foreclosure inventory, and the most foreclosure starts in the nation,” the court noted in the order. “At the close of 2009, it is estimated there will be an inventory of approximately 456,000 pending foreclosure cases statewide. The crisis continues unabated.”

The biggest problem identified by the task force: troubled borrowers and banks don’t talk to each other. More than anything else, this lack of communicatoin impedes early resolution of foreclosure cases, the panel found, concluding that earlier case management would help keep cases from going all the way through the court process and thus clogging the system.

Borrowers will be able to opt out of mediation by simply declining to participate.

The order requires mediation to be scheduled no sooner than two months and no later than four months after a foreclosure lawsuit is filed. The mediation manager assigned to the case is expected to refer borrowers to foreclosure counselors.

The task force recommended that the plaintiff pay the cost of the managed mediation program. “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,” Quince wrote in her order.

The order provides for payment plans and that the cost may not exceed $750.

If they agree to mediation, the borrower and the borrower’s lawyer must attend in person. But representatives of the plaintifff can participate by phone, the order says. Someone from the lender with full authority to offer a settlement right then and there must be either in the meeting or on the call.