With a mind to further decreasing foreclosures and the social problems they create, the Florida Supreme Court has begun to consider the idea that lenders and defaulting homesteaded borrowers should be subjected to mandatory mediation.
Though, according to the Associated Press, the reasons for the court’s suggestion may not have been so altruistic. With close to 300,000 foreclosure cases on file, the court is caught up in a case of paperwork pandemonium. There are not enough judges to go around, so the cases simply sit.
The Task Force on Residential Mortgage Foreclosures suggested that lenders should pay the freight for the mediation, so that already strapped homeowners were not saddled with additional expenses. Circuit Judge Bailey of Miami stated that early decision on the cases would make upfront payment by lenders worthwhile. Her reasoning runs that if mediation is able to restructure a loan in favor of a homeowner, the lender’s costs would be repaid by the borrower over time, thus creating a win-win situation.
But Chief Circuit Judge Haworth of Sarasota felt that borrowers with enough money should also pay part of the cost. This idea is also supported by the Florida Bankers Association. Without some financial stake in the process, they say, borrowers will simply do their best to delay the foreclosure process.
More important to averting foreclosure, however, is early intervention by mediators. The Task Force says data from banks shows that the sooner the process begins, the more likely the case is to be ameliorated; also, mediation that occurs close to the outset of a homeowner’s payment problems typically has a better financial solution.
Mediation, according to the Supreme Court, would help to unclog the system, because it might prevent the cases from ever proceeding to court. The Florida Bar has also suggested that lenders must prove they own the mortgage before they start the foreclosure process. That way, court time would not be wasted while banks try to find promissory notes.
Supporters of the process of foreclosure mediation believe it would serve to equal the odds for both borrowers and lenders. Unfortunately, as both supporters and detractors regretfully admit, for people who are jobless and have used up their savings, mediation merely delays the inevitable act of foreclosure.
Written by Marc Jablon, Realty Associates
marcjablon@yahoo.com 561 / 213 – 6139
www.MarcJablonHomes.com
Posted November 9th, 2009 by Armen Hareyan
