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Court orders managed mediation for foreclosures

Associate Editor Regular News

Court orders managed mediation for foreclosures

Associate Editor

As 2009 came to a close, the Supreme Court approved the managed mediation program recommended by the task force it created to deal with Florida’s mounting foreclosure crisis.

On December 28 — In re: Final Report and Recommendations on Residential Mortgage Foreclo-sure Cases (case no. AOSC09-54) — the court addressed the Florida foreclosure problem, which encompasses “the worst foreclosure inventory and the most foreclosure starts in the nation,” and now 456,000 pending foreclosure cases statewide.

Chief Justice Quince “The crisis continues unabated,” Chief Justice Peggy Quince wrote in her administrative order.

To help alleviate the continued increase in cases, the court approved a managed mediation program detailed by the Task Force on Residential Mortgage Foreclosure Cases in committee meetings this fall.

“In its report, the Task Force identified lack of communication between plaintiffs and borrowers as the most significant issue impeding early resolution of foreclosure cases, and concluded that effective case management and mediation techniques are the best methods the courts can employ to ensure that such communications occur early enough in the case to avoid wasted time and resources for the courts and the parties,” the order said.

After 20 weeks spent developing a plan to combat the consistent barrage of foreclosure cases slamming the courts, the task force presented its proposed managed mediation program to the Supreme Court on November 4 during oral argument and responded to the hesitations of those uncertain about implementation of a managed mediation program.

“We’re very pleased with the outcome,” said former Bar president and task force member Alan Bookman. “The court adopted the overwhelming majority of what the task force recommended. We believe that because of the unbelievable numbers — which have slowed the judicial process considerably — the mediation program will unclog the clogged system and have lenders and homeowners talking to each other for sometimes the first time.

“Cases can now be solved before they go to litigation so homeowners can stay in their homes and lenders can be paid back on their loans.”

The program is set to be put into operation in the new year through a model administrative order issued by each circuit chief judge. All foreclosure cases currently residing in the courts and involving residential homestead property will be referred to mediation through qualified providers and Supreme Court-certified circuit civil mediators.

“We are certainly in agreement with the court’s decision that a managed mediation program can be part of the solution,” said Ned Pope, director of the Mortgage Foreclosure Mediation Program at the Collins Center for Public Policy.

“We want to try to improve the program so it provides the best service to the highest number of parties. Our No. 1 goal is to keep people in their homes, because it keeps people in Florida as homeowners.”

Skepticism over cost and borrower involvement was also addressed in the court’s administrative order.

“The Task Force majority recommended that costs of the managed mediation program be paid by the plaintiff, and the Court agrees with this recommendation as the most effective approach to getting plaintiffs and borrowers quickly into mediation for early resolution for their cases,” Chief Justice Quince wrote.

“Requiring borrowers to pay a portion of mediation up front [a suggestion brought up at the November 4 oral argument] would operate as a barrier to this Court’s goal of efficiently managing these cases to avoid waste of judicial and party resources.”

Plaintiffs will pay for mediation in staged payments: part paid after the complaint is filed, and the remainder paid after mediation has been scheduled. The total fee for managed mediation may not exceed $750, and a refund will be given to the plaintiff if a borrower chooses not to participate.

Borrowers are not required to complete the mediation and, according to the order, may opt out of the process by “declining to participate upon being contacted by the mediation manager, or by not completing the pre-mediation requirements of foreclosure counseling and submission of financial documents to the mediation manager.”

Despite these minor adjustments to the task force’s initial proposal, questions remain regarding the overall outcome of a mandatory mediation program.

“The Court cannot anticipate how effective the statewide managed mediation program will be in easing the backlog of pending residential foreclosure cases in Florida,” Chief Justice Quince wrote.

An immediate change in the court system’s caseloads may not be evident, Bookman warned. “Unfortunately, because of the economy, a lot of people are going into default. This program is not going to prevent cases from being filed, but what this will do is require these cases to be referred to the mediation process,” he said. “Hopefully, these will then be worked out at mediation so that the lawsuit can be dismissed.”

To ensure the mediation program is addressing the needs of the state, the court is recruiting the help of the Committee on Alternative Dispute Resolution Rules and Policy. The committee is charged with developing a reporting system based on the results from cases sent through a managed mediation program. A detailed report is scheduled to be produced at the end of 2010.

“This program is something that will be helpful statewide, and we just need to see how quickly the various chief judges of the circuits implement the order,” said Bookman, a certified real estate attorney.

The First Circuit, where Bookman practices, began implementing its own mediation program four months ago with the help of the Collins Center, and plans are already in the works to begin implementing the changes discussed in the court’s administrative order.

“What we suggested to the court is close to what is going on here in Pensacola, and we’ve seen good results,” Bookman said.

Pope also has great expectations for the mediation program.

“Our hope is that we can continue to learn from this situation,” Pope said. “Our main goal is to do whatever we can to help alleviate the pressure on the courts because of the volume of cases out there.”

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