New Hope or False Hope? The Florida Supreme Court Orders Mandatory Mediation for Foreclosure Cases
by Charlie Hounchell, Esquire
Florida Supreme Court Chief Justice Peggy Quince directed state judges to require all future foreclosure cases to “managed mediation” before proceeding with foreclosure litigation. According to the court order announced on Monday, December 28, 2009, there are approximately 450,000 pending foreclosure cases in the state of Florida. Directing these cases to managed mediation will theoretically help to resolve cases sooner and, in turn, reduce the number of foreclosure cases currently pending in Florida’s circuit courts.
It should be noted that this order only applies to homesteaded residential properties. Commercial or investment property owners currently facing foreclosure will not have the opportunity to take advantage of any benefits that court ordered mediation may offer. Additionally, this new program will not be available to existing foreclosure cases.
Mediation managers must schedule the mediation no later than 120 days after the foreclosure case has been filed. The lender must pay the approximate $750 mediation fee but can recover this expense should the foreclosure case proceed to court.
It remains to be seen whether the lenders participating in court ordered mediation will be amenable to discussing the many options available to homeowners no longer able to afford their current mortgage payments.
Historically, a loan “modification” will simply mean that the lender will agree to reduce your current monthly mortgage payment and/or interest rate while extending the loan pay-off period to compensate for the “modification”. In other words, your 30 year loan may be transformed into a 60 year loan (as the banks will certainly never agree to reduce the principal amount owed on your loan)
At mediation, the bank may also agree to allow the homeowner to sell his or her home in a short sale transaction or accept a deed in lieu of foreclosure, among other options. The biggest and most important financial hurdle is for the homeowner to negotiate favorable terms pertaining to the remaining deficiency loan amount (i.e. the difference between what is owed on your loan and what you sell your house for). A total or partial discharge is ideal. However, be prepared for the bank to file a lien for that deficiency amount and/or garnish your wages should you fail to negotiate a complete discharge of the remaining debt.
It would appear that court ordered mediation may provide new hope towards abating the mortgage foreclosure crisis in Florida. If anything, mediation will require the lenders to meet face to face with the homeowner. Assisting the banks in putting a face on this crisis can’t hurt. There are hundreds of thousands of Floridians being impacted by the reality of foreclosure every day. Finding innovative and productive ways to keep good people in their homes is essential to our mutual financial survival.
The following link will take you directly to the recent Florida Supreme Court Order discussed in this blog article: http://www.floridasupremecourt.org/pub_info/documents/Filed_08-17-2009_Appendix_J.pdf
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Mr. Hounchell has a law degree from The University of Florida College of Law and he is a principal in The Law Offices Charles A. Hounchell, P.A., in Tampa, Florida. Mr. Hounchell earned his undergraduate degree from The George Washington University in Washington D.C. and he obtained his MBA in International Management from the American Graduate School of International Management (“Thunderbird”) in Glendale, Arizona.
Mr. Hounchell is a licensed title insurance agent and a real estate agent with Smith and Associates, Inc. http://www.smithandassociates.com/; http://www.livecasanova.com/. He has lived in many different countries, including Spain, Brazil, Argentina, Mexico and Germany and he speaks Spanish and Portuguese. A significant portion of Mr. Hounchell’s law practice is concentrated on Real Estate Law. He can be reached at 813-230-3376 or firstname.lastname@example.org.