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A Times Editorial

Mortgage mediation plan offers a way out

The Florida Supreme Court has adopted one of the best ideas out there to reduce home foreclosures and the court system's workload. Chief Justice Peggy Quince has announced a statewide managed mediation program to give homeowners a preforeclosure opportunity to talk with their lenders about modifying their loan. As experiments in some circuits have demonstrated, a mediation system can be far more useful to homeowners and lenders than protracted foreclosure hearings.

Florida's foreclosure mess threatens to swamp the state's court system. In Hillsborough County, 11 civil circuit judges are handling close to 2,000 foreclosure cases each. There are more than 450,000 foreclosure cases pending statewide. Responding to the record-breaking foreclosure filings, a Supreme Court task force recommended the mediation process.

In a managed mediation pilot program directed by the nonprofit Collins Center for Public Policy in three of the state's 20 judicial circuits, responsive homeowners reached settlements with lenders 65 percent of the time, according to the center. In November, Pinellas-Pasco Chief Judge Thomas McGrady issued new rules for the 6th Judicial Circuit encouraging mediation.

The program embraced by the task force and the Florida Supreme Court closely tracks the Collins Center approach. The program would be available only to homesteaded residential property owners. A mediation manager would schedule sessions within a limited time frame, and before mediation the home-owner would attend a financial counseling session. This gives the homeowner a realistic understanding of the mortgage payment he or she can afford and likely options.

Homeowners often have trouble finding someone at their lender's office who has the authority to modify a mortgage. So the program directs lenders to participate in a mediation session with the borrower — and the lender's representative must have the discretion to modify a loan. That should eliminate the games where the lender claims during mediation that nothing can be agreed to without the approval of higher-ups.

The cost of the program, up to $750 per case, is to be paid by the lender although it can be added to the debt if no agreement is reached.

The new rules will take a while to be adopted across the state's judicial circuits, since specially certified mediators will be needed. In the Pinellas-Pasco circuit, spokesman Ron Stuart says a launch in April may be optimistic. But this is a step worth taking, and it should help some homeowners keep their homes and reduce the court's workload.

Mortgage mediation plan offers a way out 01/04/10 [Last modified: Monday, January 4, 2010 7:31pm]
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