FL Supreme Court Reconsidering Foreclosure Mediation Program
Today’s Palm Beach Post reports here that the Florida Supreme Court is reconsidering the mediation program it implemented in foreclosure cases throughout Florida because so few mediations between homeowners and banks have resulted in a settlement.
Under the Court’s program, banks are forced to participate in a settlement conference with homeowners and an indepedent third party, called a mediator, before proceeding with their foreclosure lawsuit. The problem, quite simply, is that while the Florida Supreme Court can force banks to attend mediation, they can’t force banks to settle, as less than 4% of foreclosure lawsuits have settled at mediation.
I hate to say “I told you so,” but the failure of the Court’s mediation program is hardly a surprise to me. I wrote on this blog, here, on July 5, 2010 “the mediation process, no matter how well-intentioned, just won’t work.” As I explained in this letter to Pinellas County’s Chief Judge, Thomas McGrady, the problem with these mediations is that banks have no incentive to settle because they perceive no risk that they would lose the case as it proceeded forward on the merits.
On January 28, 2011, in conjunction with this article appearing in the St. Pete Times, I explained in this blog that the problem was partly one of timing. In most lawsuits, mediation happens right before trial, and both sides have an incentive to settle to avoid trial and the expense and uncertainty associated with it. In foreclosure cases, by contrast, mediations are set up within the first 60 days – a totally different dynamic, one that does not lend itself to resolutions. Quite frankly, it’s common for parties in lawsuits to be entrenched in their positions early on; it’s only through the passage of time, and staring at a trial, that they soften in their positions. By mediating in the first 60 days, the Court hence requires mediations at the wrong time.
Anyway, my point is that I’m terribly disappointed by all of this. I mean, I knew, without any doubt, that the Florida Supreme Court’s mediation program wasn’t going to work. I said as much, on this blog, explaining the problems with the program in detail. Yet here we are, more than a year later, and the Florida Supreme Court is just now evaluating what to do about the failure of the mediation program in foreclosure lawsuits.
If I could point out these flaws, over a year ago, why is the program just now being re-evaluated? Why wasn’t the program changed months ago, before thousands more Floridians were foreclosed? Why hasn’t anyone in Tallahassee been more proactive about creating a program that keeps homeowners in their homes? Does anyone care? Don’t Floridians deserve better?
Here’s the article from the Palm Beach Post…
The Florida Supreme Court ordered a review Monday of its landmark foreclosure mediation program which has shown limited success in finding alternatives for struggling homeowners.
The mandatory program for all homesteaded properties was ordered by the court in Dec. 2009 in an effort to reduce judicial caseloads and help borrowers avoid foreclosure with options that can include a loan modification, deed-in-lieu of foreclosure or a short sale.
Statewide, 3.6 percent of all cases referred to mediation in a yearlong period beginning in March 2010 ended in a written agreement between the lender and homeowner. In Palm Beach County, 1.6 percent of the 4,632 referrals made ended in a written agreement.
In Monday’s administrative order, the Supreme Court appointed five judges and one court administrator to evaluate the success of the program and recommend whether it should be continued, changed or eliminated.
Judge Burton Conner, who sits on the 4th District Court of Appeal and served on a statewide foreclosure task force that recommended mediation, was appointed to the committee.
Conner said last week that the program has experienced growing pains, but that he believes banks will increasingly see the benefit of going to mediation.
“There has been institutional resistance because it is such a new tool,” Conner said. “With anything new it takes a while to figure out how it works and how you can benefit.”
The program has had more success if only homeowners choosing to participate are considered. Under that benchmark there was a 25 percent success rate statewide and 18 percent in Palm Beach County.
Proponents also argue that results gathered by the state don’t include agreements that occur outside of mediation.
The committee has until Oct. 21 to submit its evaluation to the court. Public comments may be submitted to the committee through Oct. 3 at www.floridasupremecourt.org.
Mark Stopawww.stayinmyhome.com
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