Foreclosure Mediation is Working in Florida

floridaThe word “horrifying” is not commonly found in reports from government task forces.

Even when the subject is serious, the terminology tends to be sleep-inducing.

Not when it comes to reporting from the frontlines of the foreclosure crisis.

There are so many foreclosures in the legal system that it cannot handle them, reported the Task Force on Residential Mortgage Foreclosure Cases. It was appointed by the Florida Supreme Court, and issued its first report recently.

How bad is it?

– Florida has the worst foreclosure inventory in the nation. Of 3.5 million loans serviced in Florida, 374,134 are in foreclosure. Another 378,031 are delinquent.

– Florida has the most foreclosure starts in the nation. Even when many moratoria were in effect, almost 1 million foreclosures were begun in the first quarter of this year.

– Florida has the third-highest mortgage delinquency rate in the nation.

And the flood shows every sign of increasing. Foreclosures have moved from owners with subprime loans to those with prime loans, often because of loss of jobs or reduced pay.

And Jacksonville is one of the Florida cities that is hardest hit.

The judicial system is crushed with work. Thus, the task force basically suggested taking every step possible to resolve these cases before they hit the courts.

For instance, the task force recommends that mediation be required for all residential homesteaded property, unless the plaintiff and borrower agree otherwise, or unless pre-suit mediation was conducted.

Suggested reforms

Also suggested is referral of the borrower to foreclosure counseling before mediation, early exchange of borrower and lender information and the ability of the plaintiff’s representative to appear at mediation by telephone.

These promise to help, since the settlement rate as a result of mediation is 73 percent, the task force reported.

April Charney, a foreclosure expert with Jacksonville Area Legal Aid Inc., was on the task force. She said there still are some perverse incentives involving securitized loans that can make it more profitable for investors to have foreclosures over settlements.

“It’s a big mess,” she said.

So, while the economy apparently has hit bottom and stabilized, the housing market still looks shaky.

“It’s still not a healthy housing industry when you have one-third of sales coming from foreclosure sales,” said a Deutsche Bank economist in The Wall Street Journal.

The Supreme Court should take the advice of its task force and enforce the rules being suggested, especially mediation.

Foreclosure is painful enough without being dragged through a laborious court process.

Published by Stout Law Firm

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