Florida should eliminate the mandate for a statewide foreclosure mediation program and allow circuit courts to opt in to a revised version of the program, a working group told the state's Supreme Court Friday. Supreme Court Chief Justice Charles T. Canaday formed the workgroup last month to assess whether the settlement component has improved matters in the state, whose courts are struggling with massive foreclosure dockets.
The workgroup, which consists of five judges and a court administrator, received comments from borrower and lender attorneys, judges and mediators, as well as held conference calls and studied mediation program data. Of the circuit courts that provided comments, seven supported a local option to the statewide program, three supported continuation of the mandated program and one supported elimination of the program altogether.
‘The workgroup concluded that for those circuits that choose to continue a managed mediation program, adherence to a modified model administrative order is important to maintain consistency throughout the state," the group's chairman, William D. Palmer, wrote in the report, referring to the 2009 administrative order that created the program. "In those circuits that choose not to opt in to a modified model administrative order, the chief judge should be responsible for devising a plan for discontinuing the local managed mediation program."
Florida courts are facing approximately 350,000 backlogged foreclosure cases, according to the report, which suggests another wave of foreclosures is on its way.
"Circuit courts likely will face a new surge of cases in 2012, which will further exacerbate the backlog and further delay finality," Palmer wrote, explaining that the courts "will continue to languish" if new resources are not provided.
Several factors negatively impacted the success rate of the program, which Palmer said did not have enough time to mature. Only three courts had programs that were operational in December 2009, when the administrative order was issued. The remaining courts took between six and eight months to implement the program, Palmer wrote. On top of that, numerous outside factors – such as the discovery of robosigned affidavits – impeded the program's success. Moreover, the workgroup says participation levels were lower than they could be because consumers, unaware that the mediation program was legitimate, were often mistrusting of the program.
Feedback provided to the group further suggested bad-faith negotiations by servicers.
"The public comments received provided evidence that servicers on a broad scale resisted providing representatives at mediation with full authority to settle and refused to consider more than a narrow range of settlement options, most of which were of little value to borrowers," Palmer wrote. "Servicers had economic incentives not to settle and to keep foreclosure cases in limbo to avoid the expenses that accompany homeownership."
The workgroup recommends that the Supreme Court form another workgroup to determine modifications to the administrative order. The group also suggests that borrowers be required to affirmatively opt in to the program upon being served, that steps be taken to improve the integrity of borrowers' financial information and to identify appropriate lender contacts, and that the court explore ways to reduce overall program costs.