The state of Florida is in the process of creating a mortgage mediation program. The goal is to help more homeowners across the state and help them prevent a foreclosure. The program is being created as a result of an initiative that was started by the Florida Supreme Court in partnership with local government entities. The court has instructed judges across the state to ensure all new foreclosure filings that involve primary residences go through a formal mediation process. The goal is to slow down and ideally stop the huge number of foreclosure filings that are slowing down and clogging the court system.
The new regulation is from the chief judges of Florida’s 20 judicial circuit courts. They have all issued administrative orders implementing the mediation requirement, and the program will start sometime in early 2010. In addition, Florida homeowners have many other options to prevent foreclosures, and they can call a HUD approved agency to inquire.
Mediation involves a neutral outside party trying to get both sides in a disagreement or case to reach a settlement. So when it comes to real estate, the mediation process will ensure the homeowner and lenders come together to discuss solutions. The new requirement will be in effect only for foreclosure cases filed on a borrower’s primary residence, and it will start after the local order is issued, which will be in 2010. The process will be mandatory, and the requirement will be waived only if both the borrower and lender agree to opt out or if the issue has been resolved even before reaching the mediation sessions.
To be eligible for the Florida foreclosure mediation program, homeowners across the state must first see a foreclosure counselor who is certified by the U.S. Department of Housing and Urban Development. It has been shown that homeowners who undergo such counseling and seek advice are much less likely to re-default on their mortgages after an agreement has been put in place, and therefore prevent another future foreclosure filing.
The process is as follows. The mediation hearing needs to be scheduled between two and four months after the foreclosure suit is filed by the bank or lender. The state requires that the lender or mortgage servicers will pay the cost of the process, which the court order said can’t exceed $750, but the lender can seek to recover the cost from the homeowner, through a foreclosure judgment, if the mediation process is unsuccessful.
Why may the borrower possibly need to pay a fee? The reason is that requiring borrowers to pay a portion of the mediation cost up front would operate as a barrier to this court’s goal of efficiently managing these foreclosure cases to avoid waste of judicial and party resources. So it helps ensure the validity of the program. However, a potential fee at the end of the process will help reduce the number of cases that are filed that have no chance of resolution.
Also keep in mind that tenants also can opt into the mediation program, but would have to split the cost with the mortgage servicer or lender.
The mediators who are involved in the program need to be non-profit organizations that are independent of the judicial branch, well trained professionals, politically and professionally neutral, capable of sustained operation and service without fiscal impact to the courts, and most importantly they must have demonstrated an ability to efficiently manage the extremely high volume of foreclosure actions across the state.
The Florida high court’s order also requires mortgage lenders and / or servicers to prove they hold the promissory note, and the new regulation also orders the creation of a statewide reporting system to collect data on mediation outcomes so that the program can be improved on over time.
When you receive a notice of foreclosure from your bank or lender, there should be details on the process in that letter. However, there are other options available to you. You can also contact a Florida HUD counseling agency. In addition, you may be able to start to receive assistance from a mediator even before the filing occurs. Ask the HUD counseling agency about this service as well.
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