Pre-Foreclosure Mortgage Mediation Program - Florida

In December of 2009, the Florida Supreme Court issued an Administrative Order requiring that all residential mortgage foreclosures be mediated before a judge can issue a Final Judgment in a foreclosure case. Each judicial circuit is selecting its own, independent, non-profit mediation group which will receive referrals for all filed cases. As an alternative, it is permissible under the Supreme Court’s Order to have the mediation performed before a foreclosure suit is filed. Since a lender and borrowers mutual goal is to find resolution to a defaulted mortgage as quickly as possible, pre-foreclosure mediations should be performed on post-mitigation, pre-litigation loan files. Ordering pre-suit mediation may eliminate the need for a formal foreclosure filing thereby saving both parties thousands in filing fees, attorney fees and several months of time. Potential outcomes of mediation are:

1. Modification of mortgage terms (rate, term, amortization)
2. Partial loan forgiveness or principal set aside
3. Placement of delinquent payments at end of term
4. The coordination or approval of a short sale
5. Deed in lieu of foreclosure with or without a waiver of deficiency judgment
6. A negotiated repayment plan
7. Loan reinstatement under certain conditions
8. Right to Rent in exchange for a non-contested action
9. Impasse and filing of a formal foreclosure

The only change to a standard foreclosure timeline is the addition of three weeks at the front end (prior to filing) to give the pre-foreclosure mediation group time to contact and schedule the mediation. Almost 100% of mediations end with a negotiated settlement. Pre-suit mediation will reduce the time and fees that all parties pay to resolve bad loans.

What kind of results should a participant expect?

Borrowers from almost half of all files presented to us are desirous of mediating. There is a strong need for pre-foreclosure mediation.  We attempt for three weeks to have the borrowers commit to mediation and mirror the mediation requirements of the Administrative Order of the Florida Supreme Court using Florida Supreme Court Certified Mediators. Of note is the fact that 95% of the cases that were mediated resulted in a formal, written settlement of some sort which is a much better alternative than the filing of a lawsuit. A census summary of the results of our mediation sessions follow:

1. Short Sale Negotiated / Approved - 0%
2. Deed in Lieu of Foreclosure - 28%
3. Mortgage Assumption by 3^rd party - 0%
4. Partial Claim (HUD Grant) - 0%
5. Repayment Agreement - 22%
6. Temporary Rate Reduction - 6%
7. Deed in Lieu and Lease Back - 0%
8. Waiver of Late Fees - 0%
9. Blended Equity Mortgage - 0%
10. Forbearance Agreement - 6%
11. Loan Modification - 33%
12. Transition Strategies - 0%
13. Options in the Contest of Bankruptcy - 0%
14. Other Resolution / Impasse - 5%

 Bernard Danzansky, barney@equityfll.com

Cell: 561/212-7563  - Voice 954/548-3933