Mandatory Mediation on Foreclosed Bank Owned Cases
The Florida Supreme Court’s task force on residential foreclosures has recommended mediation on all foreclosure cases involving primary residences. The task force also suggested that judges should expedite all cases that deal with abandoned, vacant foreclosed bank owned properties.
The task force’s recommendations will be submitted to justices in Florida. According to industry analysts, justices have been seeking ways to help the state court system deal with the backlog of foreclosure cases resulting from the economic downturn and the collapse of the housing market in Florida.
But the 15-member task force did not recommend recruiting additional staff and judges. The task force, headed by Circuit Judge Jennifer Bailey, noted that it should not be expected that the recommendations would be funded given the current financial situation of the state.
The task force recommended dividing all foreclosure cases on the court into three categories, namely primary homes or homesteads, abandoned and vacant properties and others. It suggested that mediation should be mandated for primary home or homestead foreclosures unless borrowers and lenders agree not to or a pre-lawsuit mediation had been carried out.
Industry experts praised the idea of expediting abandoned and vacant foreclosure cases. However, they anticipated more delays on homestead foreclosures due to mandatory mediation. Some experts said that requiring mediation for homestead foreclosure cases is not advisable and will just result to more delays.
Meanwhile, members of the task force were impressed by the experimental managed mediations conducted by the think tank institute, Collins Center for Public Policy in three judicial circuit courts that have jurisdiction on Miami-Dade County, western Panhandle and southeast Florida counties of St. Lucie, Martin, Okeechobee and Indian River.
According to market data, the mediation in these areas resulted to a settlement rate of 73 percent. The rate increases to 79 percent if cases were settled by way of foreclosure counseling and before formal mediation.
The task force also suggested that lenders shoulder the initial fee required for managed mediation. However, it recommended that the state try to explore some government funding sources. Under the others category, the task force recommended that both borrowers and lenders split the cost of mediation.
Other recommendations by the task force include creating a centralize foreclosure Web site that will provide pertinent and basic information, adopt standard forms and procedures, promote consumer awareness on how to avoid foreclosure fraud and aggressively prosecute unethical lawyers.
