Mediation in Foreclosure Cases
Mark Puente of the St. Pete Times has a nice write-up on what he calls Problems with Foreclosure Mediation. The article is here and is quoted, below.
I’m quoted in the article, essentially agreeing there are problems with the mediation process, and I stand behind that. However, for me, the problem is far more than the banks’ informational advantage through document production and file access (or lack thereof). In my view, the mediation process does not work in foreclosure cases because mediations take place too soon.
The mediation process works (in non-foreclosure cases) because both sides fear a risk of losing the case if it goes to trial. This is why every mediator says “you never know what the judge/jury will do” – and it’s true. We don’t know. In your typical case, either side could win. But in foreclosure cases, the dynamic is totally different. When mediation takes place, banks think they will win the case (at summary judgment, just like they usually do). As a result, they perceive no risk of losing the case and have little to no incentive to settle at mediation.
The problem is largely in the timing. In foreclosure cases, the mediation process is designed to take place within the first 60 days. In non-foreclosure cases, mediation usually takes place much later; often just before trial. By mediating right before trial, the parties all realize that if they don’t settle, they will go to trial (and face the risks associated with losing). This “all or nothing” proposition is scary for most litigants, encouraging settlements. Until the mediation process is set up that way in foreclosure cases, I fear it will continue to be a process that does little more than frustrate and disappoint well-intentioned homeowners.
Here is the article …
A program set up to prevent foreclosures provides greater access to financial records for bank attorneys than defense lawyers in Pinellas and Pasco counties, those defending homeowners say. Since the mediation program started in August, defense attorneys say they haven’t had electronic access to the records even after their clients provided the court-ordered information to mediators. That has put them at an unfair disadvantage. Defense attorneys also say banks are dictating the dates and times of the mediation sessions without checking the schedules of opposing counsel and homeowners.
Mark Stopa, a St. Petersburg foreclosure defense attorney, said the lack of access to records gives banks an upper hand in the process.
“It is a problem,” he said. “The whole process is inequitable and not doing what it was intended. I am not happy or excited about the process.”
In Hillsborough County, defense attorneys receive access to the case information once they prove representation.
Ron Stuart, spokesman for the Pinellas-Pasco judicial circuit, said the access issue is being remedied. He urged patience as the remaining glitches are being resolved. He acknowledged that court officials knew about the different levels of access when the program started. Clearwater-based Mediation Managers Inc. operates the program in Pinellas and Pasco counties.
“We were going into an avenue that was all new to us,” Stuart said. “It’s in the hands of Mediation Managers. They’re trying to get it solved as quickly as they can.”
The high court ordered the state’s 20 judicial circuits in late 2009 to sponsor mediation sessions between homeowners and lenders to reduce foreclosures. The program applies to owner-occupied, residential properties and aims for a quick resolution. Lenders pay a $750 fee for each case. A successful mediation could lead to a modification of the mortgage loan, such as a lower interest rate or a time extension for the borrower. Some people still will lose their homes.
Mediation Managers immediately notified court officials about the access problem when defense attorneys complained last month, said Dick Rahter, the nonprofit’s president. The technology needs to be improved so defense attorneys can get access to information about their cases, but not private records in all cases, he added.
Nobody, Rahter said, anticipated this problem. “The policy is being looked at and may change in the near future,” he said. “I was always concerned about that from the beginning.”
Bank attorneys, he said, are not controlling the scheduling process. Some problems developed when defense lawyers didn’t notify the mediation program about representing a client, Rahter said. He acknowledged that some scheduling conflicts have slipped through the cracks. “It’s kind of like a juggling act,” Rahter stressed. “We’re doing our best.”
Mark Stopawww.stayinmyhome.com
Posted in Main | 10 Comments »
I completely agree with you regarding the timing of foreclosure mediation. The idea was to divert the cases so as to take pressure off of the judiciary, save everybody time and money, and to get the borrower’s loan modified before the arrearage grows to the point that a modification won’t work. The problem, as you’ve pointed out, is that the borrower has almost no leverage at the early stage in which these RMFMP mediations occur. And the worst thing is that once the mediation impasses, that’s it. It will be very rare for the borrower to get a second shot at it, especially in the 13th Judicial Circuit.
-Ken
http://www.facebook.com/MediatorKen
http://www.PinellasMediation.com
Well said, Ken.
What frustrates me is that I said this in June, when the program first came out. The fact that it’s failing – for this reason – should surprise nobody.
Let’s just hope the judges are willing to change how the system operates.
The inability to get a second mediation is all the more reason not to mediate at the outset.
It’s perverse, but if you forego mediation early on, you’ll probably get one later, but if you have it early, you’ll probably never get another chance.
I have been trying to modify my home loan with Bank of America since 2007, got a slight change, but not as it should be. They will not tell me the name of the investor, as now its been sold to an investment group. The investor does not participate in the HAMP program, so now to another plan. Susann Fanilli branch manager on Isand Estates took pity on me over a year ago and told me a couple of weeks ago, that I was denied and thats’ that. Meanwhile I’ve been paying all along. This is my primary residence, homesteaded and I have been living here since 1993.
I missed your phone call earllier, please call me again I’m anxious to get this problem solved. 727 599 3660 cell phone.
Thank you and look forward to speaking to you. Marlyn Tracey
After reading your latest blog entry Mark why would any homeowner want to go thru with the added expense of Mediation???
I think mediation makes sense if the timing of it is right. Right at the inception of the case? No. Later on in a case, after the judge has denied summary judgment? Yes.
For me, mediation is all about leverage. If both sides have some leverage, both sides perceive some risk of loss, so both sides have some incentive to settle.
Early on, in foreclosure cases, homeowners have little leverage. Later on, they tend to.
Obviously I’m generalizing a bit here, but I feel strongly about this.
I obtained an attorney through the FASH program and after I was served a summons for foreclosure from Wells Fargo the attorney filed a Motion to Dismiss based on the acceleration clause in my mortgage agreement. Wells Fargo did not respond and in January I was noticed through the court that I refused mediation….I was never noticed and the attorney filed a Motion for that. Now, the attorney is advising me to go to Mediation Managers for a counseling. I do not agree and feel it is only at the banks advantage. what are my options? I asked the attorney why he did not follow through on the Motion to Dismiss or file a proposed Order with the court. Still waiting on a response from this attorney. What do you suggest?
Give us a call. 888-450-1549. We’ll be happy to give you a free consult.
The United State has really hurt itself with the credit situation. I just don’t get it. We pay millions in taxes and the debt just keeps getting higher. Why doesn’t anyone ever have to answer where the money is going. Just like the workplace, if you are held responsible for your actions, this kind of actions doesn’t happen.
I agreed to go to mediation, but BoA denied it. They have recently filed for final judgement. What should be my next step? I think there was some improper lending when I took out the mortgage with Countrywide.
Should I just prepare to move out of the house? How long do they give you to vacate the property?
Taylor,
Do you have a lawyer? FIGHT! DEFEND!
Mark