Goal is to Improve Lender-Borrower Communications
On Dec. 28, 2009, Peggy A. Quince, chief justice of the Supreme Court of Florida, signed an administrative order requiring "managed mediation" for all residential foreclosure cases filed in the state courts. The mediation requirement is a response to Florida's status as the state with the third largest mortgage delinquency rate and the most foreclosure starts in the country. The court estimated that as a result of the continuing crisis, there would be approximately 456,000 foreclosure cases pending in Florida by the end of 2009.
In Order No. AOSC09-54, the Florida Supreme Court approved with minor changes the recommendations made in a final report by the 15- member Task Force on Residential Mortgage Foreclosure Cases issued last August. This report "identified lack of communication between plaintiffs and borrowers as the most significant issue impeding early resolution of foreclosure cases" and it concluded that "effective case management and mediation techniques are the best methods courts can employ to ensure that such communications occur early enough in the case to avoid wasted time and resources for the courts and the parties."
Task force delegate and Florida CFO Alex Sink said in a Dec. 28th press release, "With Florida facing the worst foreclosure crisis in the nation, our state must take meaningful action to help Floridians stay in their homes.... Requiring a uniform mediation program is an important step to improve communication between homeowners and their lenders, something vitally important as we work to provide real relief to struggling residents."
Due to the anticipated scope of the caseload, the managed mediation process approved by the court involves using outside mediation provider organizations to manage the program and administer the cases. Another reason for this approach is that outside organizations could collect fees for mediation services whereas Florida trial courts are barred by law from collecting such fees.
The task force developed "parameters" for qualifying providers, which the court also approved. The parameters include being a not-for-profit organization, being politically and professionally neutral, and being capable of both sustaining operations with no fiscal impact on the courts and administering large caseloads in an efficient way.
The court also approved the services to be provided by qualifying providers and the task force's recommended foreclosure training standards for mediators.
How the Program Works
Under the managed foreclosure mediation program, each circuit judge would issue a model administrative order to refer each case to mediation. However, borrowers can opt out in certain ways. One way is to participate in a pre-suit mediation that is considered "independent, genuine, fair and impartial."
If a borrower does not opt out, the court's mediation referral order would make the mediation provider responsible for the following:
* contacting the borrower in order to explain the mediation program,
* referring the borrower to foreclosure counseling by a HUD-certified counselor,
* assigning the case to a Floridacertified mediator who has been trained in foreclosure matters,
* facilitating the parties' exchange of documents using electronic means, preferably, as suggested by the task force, a Web-based information technology (IT) platform,
* scheduling the mediation conference at least 60 days but no more than 120 days after a foreclosure lawsuit is filed,
* developing procedures for compliance with the circuit court's administrative order, and
* maintaining confidentiality of borrower financial information, as required by Florida law. …