Right to Mediation in Foreclosure Cases

Did you know that you have a right to request that the court order mediation in your case before a final judgment of foreclosure sale of your property?

Mediation is an informal settlement conference, normally required to be completed in all civil litigation matters before the case goes to trial. The mediation is conducted by a neutral mediator who acts as a neutral facilitator. The purpose of mediation is to bring the parties together in an effort to reach a settlement.

 At mediation you should bring your attorney if any. The proceeding is privileged and confidential and nothing said at the mediation will be disclosed to the court except in rare cases.

The Administrative Order - NO. 2009-02, In the Circuit Court of the Ninth Judicial Circuit, In and for Orange County, Florida was written by Belvin Perry, Jr., Chief Judge. Judge Perry wants to encourage plaintiff-lenders to engage in pre-suit mediation to avoid the continued burden on the Clerk of the Court and the judiciary. In this order, he does make sure that contact information including phone numbers and addresses to the loan workout departments are attached and available for the homeowner.

The Defendant-Debtor has to request the mediation. To that end, Counsel for the Plaintiff will coordinate and schedule the case for mediation within 45 days of the request. A list of Board Certified Civil Mediators who are willing to provide mediation services at significantly reduced rates will be maintained by the Orange County Bar Association. A representative of the Plaintiff-Lender with full authority to settle must participate in the mediation and attendance of the representative must be continuous though out the mediation session. The Plaintiff-Lender will pay half the cost and Defendant-Debtor will pay half the cost.

The homeowner will receive a notice of Right to Mediation advising him or her the right to request a court ordered mediation in their case before a final judgment or foreclosure sale of the property. In this notice the homeowner will be advised that during the mediation, they may only discuss four avenues of resolution;

1. Reinstatement of the mortgage

2. Refinance

3. Sale of your home

4. Foreclosure sale

In a nutshell, that is Administrative Order No. 2009-02

After I read through this order, it was very clear to me that this was not designed to help the homeowner but rather it was designed to stop wasting judicial resources and court staff time. At the same time, this administrative order is designed to look as if it is good for the homeowner but instead, it gives all the power to the lender and none to the homeowner.

Let’s look at the topics which could be discussed during the mediation. These are the only topics that will be discussed.

1. Reinstatement of the mortgage-This is a Repayment Plan- This program allows you to repay your delinquent amounts over a specified extended period of time in addition to your regular monthly payments.

Of course, if you can’t afford to make the regular monthly payments, how will you ever make the delinquent amounts added to the regular amounts? This plan will not work for most. Anyone who is deciding on a mediation before a final settlement hearing, is probably not in a position to use this plan.

2. Refinance - With the average pre-foreclosed home in negative equity, who will refinance you? Add to that, you are at lease four months behind on your mortgage payments, your credit has taken a large hit so refinancing is out of the question.

3. Sale of your home -- You probably can’t sell it for enough to pay off the mortgage so you will have to sell it for less than it is worth. You can’t do that without the lender’s approval. Where will you live? You really want to keep your home, so this is not a good option for you.

4. Foreclosure Sale - This is where it is all going anyway. You don’t want this to happen. You don’t have the money to catch up your payments plus interest and fees, so you will lose your home. Your family will be out on the streets.

This is the plan that Chief Judge Belvin Perry’s Mandatory mediation offers. The one option that will make this worth while is missing. That option is a loan modification. Judge Perry did not see fit to give the homeowner a real chance to save their home. This mediation is made to look like it for the homeowner, but it is designed to help the lender.

Added to this mockery of fairness, the homeowner is led to believe he or she has to participate in this injustice and on top of it all, pay for the privilege.

What do you think? I really want to know.

Lawrence A. Robinson

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