Foreclosures - Court to force lenders, borrowers to mediate
Overwhelmed by foreclosures, the Miami-Dade Circuit Court plans to announce today a mandatory mediation program for cases involving owner-occupied homes.
The program is set to begin May 1.
Chief Circuit Judge Joseph Farina signed an administrative order April 9 creating the program, which mandates lenders to pay an additional $750 fee for the mediation services of the Collins Center for Public Policy, a nonprofit Tallahassee think tank specializing in dispute resolution.
Civil administrative Judge Jennifer Lee Bailey began talking about the need for mediation when she took over in January amid recurring complaints that mortgage holders can’t get anyone in a position of authority at their lenders to work with them.
Judges across the nation have been hunting for relief as foreclosures increasingly crowd their dockets. In Miami-Dade alone, 56,000 foreclosure actions were filed last year. Broward and Palm Beach counties have seen their foreclosure filings almost double in a year.
Palm Beach has been operating under a forward-thinking set of administrative orders dealing with foreclosure that keeps mediation as an option. In Broward County, foreclosures get shifted to senior judges if they threaten to overwhelm a judge’s calendar.
Miami-Dade is the third circuit in the state to impose mandatory mediation in foreclosures on owner-occupied homes. The 19th Circuit including Indian River, Martin, Okeechobee and St. Lucie counties and the 1st Circuit covering Panhandle counties issued similar orders in recent weeks. Many other circuits have rules suggesting alternatives to litigation, and several have barred telephone hearings in foreclosure cases.
“It’s an attempt to strike a delicate balance,” Bailey said. “This is an idea to ensure communication occurs. What happens in cases now is that the borrower gets served, gets defaulted, and they don’t know where to go for help.”
A news conference is planned for today to announce the mediation program.
While some believe mediation is the answer, a banking industry leader is expressing caution.
“My question is what if we work out an agreement, and what if the other side doesn’t live up to the terms of that mediation agreement? Do we now have to wait another 12 to 18 months to get that property back into the economy?” asked Alex Sanchez, president of the Florida Bankers Association.
While mediation gives homeowners a better chance of staying in their homes, mortgage payments are still due. “Are we just creating an extra layer here to further delay the inevitable?” Sanchez said.
Adele Stone, a partner with Atkinson Diner Stone Mankuta & Ploucha in Fort Lauderdale, lauded the program.
“The reason why these administrative orders have come through is because of the inability of the defendant to communicate with the lender,” said Stone, whose practice includes foreclosure defense. “The borrower never faced the lender.”
Richard Milstein, an Akerman Senterfitt shareholder in Miami who has a probate practice, expects mediation to ease problems for the courts rather than add to them.
“It will help unclog the courtroom,” he said. “Any method that parties can use to resolve issues short of litigation is the proper method for resolution. It saves time, money and energy.”
Under Farina’s order, a mediated case is slated to last no more than 120 days from the filing of a foreclosure complaint to finish. Some judges delay foreclosures for six months if homeowners appear in court and indicate a willingness to work with their lenders.
Lenders would face a bigger bill for heading to court going forward. The mediation fee would come on top of higher foreclosure filing fees moving through the Legislature. If new fees are adopted at the state and county levels, a lender’s fee for starting a foreclosure valued at more than $250,000 would escalate from $280 to $2,750.
Foreclosure defense lawyers, like Miami attorney Richard Burton, defended the increase.
“The person who will pay the most to stay in that house is the guy who is presently in there,” he said.
* Foreclosure cases will go to mediation through the Collins Center for Public Policy unless the parties stipulate otherwise in writing within five days of service to the defendant.
* The lender must pay the Collins Center $750 within five days of a filing or the complaint is dismissed.
* The Collins Center will have 30 days to contact the defendant and refer the borrower to a U.S. Department of Housing and Urban Development or National Foreclosure Mitigation Counseling program.
* The Collins Center schedules mediation with civil mediators trained in foreclosures, paying them $350 of the lender’s fee.
* Each foreclosure case would be completed within 120 days of a foreclosure complaint.
* Mediation proceedings are confidential and inadmissible in future legal proceedings unless otherwise stipulated.