By Annie Butterworth Jones
Associate Editor

A staggering number of foreclosure cases are currently pending statewide; 95 percent of Floridians losing their homes have no legal representation; and the courts can’t solve the emergency alone, according to the chair of the Task Force on Residential Foreclosure Cases during oral arguments at the Florida Supreme Court.

On November 4, 11th Circuit Judge Jennifer Bailey, task force chair, presented the findings of the final report to the Supreme Court and responded to the hesitations of those uncertain about implementing a managed mediation program.

In her opening comments, Judge Bailey emphasized the simplicity of the task force’s proposal forged on a tight deadline so the court can address the emergency statewide.

“This is not brain surgery,” said Judge Bailey. “This is common sense. The bottom line is it’s a real-world solution to an impossible problem.”

The proposed program would require managed mediation for borrower-owned and operated homesteads, which make up about 50 percent of 291,309 foreclosure cases sitting in the system as of September 30. Cost of the mediation would be paid for by the lender. This stipulation has some parties speculating about whether the program could work.

“I believe that successful mediation only occurs when both parties have ‘skins in the game,’” said 12th Circuit Chief Judge Lee Haworth, author of the task force minority report. “There needs to be a built-in process that legitimizes the responsibility of people who can pay; otherwise the Donald Trumps of the world can get free mediation.”

Haworth and others representing the minority suggest the courts could help determine which borrowers have the capacity to pay and which do not. The problem with this particular solution, Bailey argued, is that it puts the burden right back where it is now: with the courts.

“It’s dependent on court resources, and that’s what we’re trying to avoid,” Bailey said.

Forcing qualified borrowers to participate in the mediation program has been another point of contention since the report’s August release. The task force responded to the concerns by describing a “modified opt-in” solution, in which mediators are required to reach out to borrower-owned and operated homesteads, but the borrower is not required to participate.

Of course, the task force maintains that opting in to the counseling and mediation program is the better option for borrowers, especially for those representing themselves. According to the task force, approximately 95 percent of borrowers are pro se. The number is not hard to believe given the economic crisis and the increasing unemployment rate; borrowers simply cannot afford legal representation.

“They need a person, not phone calls,” said Rebecca Storrow of the 15th Circuit’s Alternative Dispute Resolution program. The 15th Circuit utilizes law students and volunteers to help borrowers wade through overwhelming foreclosure paperwork, a model lauded by the Supreme Court justices during proceedings. The task force indicated appreciation for the circuit’s approach, but criticized its reliance on volunteers and interns.

Bailey also dismissed earlier suggestions discussed at a previous oral argument on court rules by Alan Bookman, a Pensacola real estate attorney, task force member, and past Florida Bar president.

Bookman and Mark Romance, chair of the Civil Procedure Rules Committee, support a judge verification requirement that would call for a judge to verify or cancel a foreclosure sale — rather than cancellations by “no shows” at the sale, resulting in rescheduling the sales.

“We need to get the cases that can settle out of the system early, before the consumption of judicial resources,” said Bailey.

Comments to the court
After a report by the Task Force on Residential Mortgage Foreclosure Cases was published on August 17, comments from the public came pouring into the Florida Supreme Court. The final report details a managed mediation program that would be required of all homestead exemption cases. The cost of the mediation would be assigned to the lender. Over 40 public comments — some positive, many apprehensive — were received before the October 17 deadline and can be found online at www.floridasupremecourt.org. Here are excerpts of varying perspectives filed with the court:

“In contrast to other real estate lawyers, who deal in ‘sticks and bricks,’ I work all day with human beings and it shows in my office. I have toys on the back table in my office for the kids and a big box of Kleenex on my desk for their parents, who often break out in tears during their initial consultation with me. I see much sadness in the course of a typical day. My office is a place where people come to cry. Mine is not a happy practice.

“The foreclosure crisis is tearing at one of the key elements of the American dream: home ownership. . . . The typical profile of my clients has transformed from over-mortgaged borrowers with exotic loans to people who were forced to stop making their payments because of unemployment or underemployment. There are over a million people looking for work in Florida, and many of them also run the risk of losing homes. Hence, the ‘foreclosure crisis’ is part and parcel of the economic crisis, and I suspect that anything that we do as officers of the court will be but a band-aid until the underlying economic situation improves and the economy starts to generate new, well-paid jobs. Simply put, foreclosure is only the cough symptomatic of the underlying economic flu.”