By Mark D. Killian
Contending that pre-judgment mediation could save more than 130,000 Florida homes from foreclosure and assist more than 360,000 Florida borrowers, a group of private lawyers and legal service organizations has petitioned the Supreme Court to require mediation in all new and pending cases involving the mortgage foreclosures of owner-occupied residential properties.
“These financial storms have hit Florida with the financial force of a category five hurricane,” Miami’s Kendall Coffey wrote for the petitioners, which include Jeffrey B. Crockett of Miami, the Florida Justice Institute, Legal Services of Greater Miami, and Florida Legal Services. “There are a projected 423,700 foreclosures in Florida in 2009 and a projected 1.4 million in Florida over the next four years.”
The February petition urging the court to invoke its emergency rule-making authority says one of “the most frustrating realities” for many home-owners facing foreclosure is the inability to speak to a responsible decision- maker for the lender in order to explore solutions that might ultimately serve the interests of all concerned.
“Too often, it is not until the lender’s motion for summary judgment is heard, or even later at the foreclosure sale itself, that these individuals first have an opportunity to discuss their situation with the lender and attempt to resolve their differences,” according to the petition. “By then, it is too late.”
The proposed emergency rule contains some of the following provisions:
• Unless a stipulation is specifically invoked by the parties in writing within five days of service of the foreclosure complaint on the main defendant, the presiding judge shall enter an order referring the action to mediation.
• Within 15 days after the designation of the mediator, the court shall notify the parties of the availability of pro bono representation.
• A party to mediation shall only be deemed to appear at a mediation conference by the physical presence of a representative with full authority to negotiate on behalf of the party and to authorize settlement. Neither party may attend the mediation by telephone.
• Plaintiff’s counsel shall submit to the mediator or mediation manager within seven days after the mediator is appointed, a “Plaintiffs Certificate Regarding Status of Residential Property” regarding whether the property is owner-occupied and, if so, the parties’ representatives to appear at mediation, the property’s location, and information on the lender’s representative with authority to settle which shall be signed by plaintiff’s counsel.
• The mediator or the manager of a mediation service that each court may use shall be compensated in advance by the party who filed the initial foreclosure complaint no later than 10 days after the designation of the mediator. If the matter does not resolve at mediation, any costs advanced may be taxed by the court as a cost of litigation in the final judgment of foreclosure.
A number of Florida circuits already have developed administrative procedures to give borrowers additional time and assistance in avoiding foreclosure. In the Fourth and Seventh circuits, Duval and St. Johns county judges have required that all foreclosures filed have a “Notice of Legal Assistance Regarding Foreclosure Cases,” attached to the complaint that provides borrowers with contact information for Jacksonville Area Legal Aid. Nassau County judges have ordered that no foreclosure may be heard when either party appears only by telephone. Orange and Osceola county judges from the Ninth Circuit have also ordered that no telephonic hearings may be conducted in foreclosure cases.
In the 12th Circuit, Sarasota, Desoto, and Manatee county judges have recently drafted orders and forms governing foreclosures that require a “circuit foreclosure liaison” be appointed by each party as the court’s point of contact, and established the “Homestead Foreclosure Conciliation Program,” requiring lenders to schedule a phone conference with homestead owners in an attempt to resolve the dispute. Duval county judges in the Fourth Circuit are similarly attempting to open the lines of communication between homeowners and lenders through the establishment of a court-supervised “loss mitigation” program, that would give homeowners and creditors the option of filing a request for loss mitigation after the initial foreclosure complaint is filed. If the court enters a loss mitigation order, each party is required to designate a contact person to report to the court, negotiate in good faith, and provide the court with regular status updates detailing the negotiations.
“While many of these administrative procedures contain provisions suggesting mediation or explicitly authorizing courts to order mediation upon request by either party, other Florida circuits have taken the additional step of ordering mandatory pre-judgment mediation in all owner-occupied residential mortgage foreclosure actions in an attempt to protect their citizens against the adverse economic and familial impact of high residential foreclosure rates,” the petition says.
In the 18th Circuit, Seminole county judges have ordered that for all residential mortgage foreclosure cases in which a responsive pleading seeking relief is filed by the borrower, the lender’s attorney must coordinate and schedule the case for mediation prior to scheduling the matter for final or summary judgment. The mediation fees, which are set by administrative order, are paid in advance by the lender, and the mediation must be attended by someone with full settlement authority.
The petition indicates while these efforts are an important step, there is a need for a unified statewide system to stem the tide of foreclosure suits and relieve “the immense pressure those suits place on Florida’s courts, families, and economies.
“At a time when the number of mortgage foreclosures has increased by 97 percent statewide in the past year and national banks face the possibility of 20 different foreclosure procedures in each of Florida’s 20 circuits, a uniform statewide system which requires lenders and borrowers to come together after filing suit but prior to foreclosure is necessary,” the petition notes.