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“A Compromised Program”

 I previously discussed how fraudulent paperwork has compromised the foreclosure process around the country and has even led one state high court to invalidate foreclosures where the banks couldn’t prove they held the mortgages.

Now, according to Tampa Bay Online,  it also appears the questionable ways in which lenders and foreclosure attorneys are handling paperwork is adversely affecting Florida’s foreclosure mediation program.

Court-mandated foreclosure mediation programs have been implemented to help homeowners and to handle the overwhelming number of foreclosures currently clogging court dockets. Though the programs are new, the participation data from various judicial circuits is rolling in and we’re getting a sense of whether these programs will be successful.

The early indications don’t look promising. The TBO article claims only 1% of eligible cases statewide have been resolved during the foreclosure mediation program’s first four months. In Hillsborough County, alone, in only 4 of the 492 cases referred to mediation at this point have the borrower and lender come to an agreement (i.e., loan modification or short sale).

The mediation program, per se, is not the problem, however. The program cannot function properly due to the sloppy paperwork and processes of lenders and so-called foreclosure mills, those large law firms involved in handling thousands of suits on behalf of lenders.

 The chief complaint of the nonprofit agencies authorized to manage the mediations for the state’s judicial circuits is that attorneys from the foreclosure mills submit incomplete or flawed documents, making it difficult to locate borrowers. Once foreclosures are filed, mediators have 60 days to reach homeowners and get them to agree to the mediation. If it’s not the messy documentation that makes it hard to contact borrowers, the process servers hired by the lenders’ attorneys often fail to deliver the lawsuits on time. When mediators are able to actually reach borrowers, some of them haven’t even been served with the lawsuit yet. As a result, even if the homeowner were to then choose mediation, the 60-day timeframe has elapsed and the case has been transferred back to court. The homeowner is placed in yet another can’t-win situation. Whether it’s erroneous paperwork that prevents mediators from locating borrowers or the lenders’ process servers who can’t seem to deliver the lawsuits in a timely fashion, homeowners are blocked from participating in a program that could ultimately help keep them in their homes.

 The good news is that both foreclosure mills and process servers have come under greater scrutiny of late. As the TBO piece reports, the Florida Attorney General is currently investigating allegations of, among other things, whether process servers back-dated foreclosure documents or filed questionable affidavits And major foreclosure law firms in the Tampa are under state investigation for fraudulent foreclosure documentation.

 If you have any questions about how the foreclosure mediation program can effectively help you, please contact me at 813.251.2701 or charlie@flapropertylaw.com.

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