Attention Pinellas and Pasco County homeowners facing foreclosure. Starting this week, a new court-ordered mediation program is in place to help. Those homeowners who are contacted about participating should not fear it is a scam preying on the desperate. This program will allow homeowners to deal with their lender directly and may lead to a resolution that could allow them to keep their home.
Under the Foreclosure Mediation Program, lenders are obligated to meet with the homeowner and a certified mediator to try to work out a payment plan going forward. That could mean a loan modification, extended loan terms or a short sale, where the outstanding mortgage is satisfied by the sale even if the sale brings in less than what is owed. This should address the most persistent foreclosure complaint heard in the court system — financially strapped borrowers often find it impossible to get in touch with their lenders. The person who participates in the mediation on behalf of the lender must have the authority to cut a deal, making it less likely that lenders will simply go through the motions.
Ron Stuart, spokesman for the 6th Judicial Circuit, worries that homeowners who may be regularly fending off deceptive offers of debt relief will not realize that court-ordered mediation is an official, cost-free program. But struggling homeowners would be the losers if they failed to take advantage of mediation, and so would taxpayers. Mandatory mediation is part of a statewide effort to address the deluge of foreclosure cases still swamping the courts. The idea is that through a professionally guided meeting, foreclosures will settle before the need to go through a judicial process, saving scarce court resources.
Eventually all of Florida's circuit courts will be adopting a similar program. The Pinellas-Pasco circuit is one of the first. Foreclosures of homesteaded residential property, where the homeowner lives in the home, filed on or after July 1 will be subject to court-ordered mediation unless the homeowner declines. For cases before July 1, a voluntary mediation program is in place. Because the lender doesn't have to participate and the program isn't well known, it hasn't been particularly successful.
Under the new program, lenders must cover the $750 mediation fee that can be later tacked on to the foreclosure action if no resolution is reached. Homeowners also will receive no-cost financial counseling, allowing them to understand their options and prepare them for the mediation session.
Pinellas-Pasco has 33,000 open foreclosure cases, and so far this year 3,100 residential foreclosures have been filed. The housing crisis is nowhere near over, and plenty more foreclosures will be filed in the coming months. Now at least some troubled homeowners will have professional guidance and an opportunity to get their lenders to listen.