Floridians in foreclosure will go to mediation, chief justice's order says

Article Courtesy of The St. Petersburg Times

By James Thorner

Published December 29, 2009

Thousands of Floridians facing foreclosure will get a chance to mediate their way out of their mortgage mess.

In a court order announced Monday, Florida Supreme Court Chief Justice Peggy Quince directed state judges to shift future foreclosure cases to "managed mediation."

Mediation involves trained third-party negotiators refereeing disputes between lenders and homeowners. The single sessions generally last less than three hours and cost $750.

Mediation aims to unclog circuit courts jammed with record-breaking foreclosure caseloads. Judges have dubbed mediation the "off-ramp strategy" to divert court traffic.

"Theoretically, it will help resolve cases sooner and in doing so help us to move cases along," said Pinellas-Pasco Chief Judge Thomas McGrady, who tallied about 23,000 pending foreclosures cases in his two counties.

According to the court order, Florida has piled up more than 450,000 pending foreclosure cases. Based on new filings in November, about 13 percent of those properties were in the Tampa Bay area. In Hillsborough County, each of the 11 civil circuit judges is handling close to 2,000 foreclosure cases.

"The crisis continues unabated," Quince said in the court order.

Mediation is far from a cure-all. It affects only homesteaded residential properties. For the most part, the program is not retroactive to existing foreclosure cases.

The Collins Center for Public Policy, a Miami nonprofit, has run mediation for three of the state's 20 judicial circuits. With the adoption of statewide mediation in the next couple of months, the organization is making plans to expand to Tampa Bay and said it has the staff to do so.

Collins Center president Rod Petrey noted that only half of the homeowners earmarked by the courts for mediation followed through. Homeowners have right of refusal. But of the homeowners who did respond, 65 percent reached settlements with their lenders, Petrey said.

"Very few of the deals have involved principal reduction," Petrey said. "It's interest rate reduction, easier terms and postponed payments."

Mediation managers must schedule sessions no earlier than 60 days and no later than 120 days after a foreclosure suit is filed. After attending mandatory foreclosure counseling, homeowners should bring tax forms, pay stubs, bank statements and credit reports to mediation.

Lenders have to pay the $750 fee, but can recover the money if mediation fails and the foreclosure proceeds.

The origin of the court order was a recommendation this summer by the Supreme Court's Task Force on Residential Mortgage Foreclosure Cases.