FLORIDA MEDIATION PROGRAM FAILING

Posted: 3:53 p.m. Wednesday, Dec. 29, 2010

Florida homeowners have had scant success in the state’s required foreclosure mediation program with just 6 percent leaving the negotiating table with a resolution.

The first statewide measure of the program, which the Florida Supreme Court made mandatory one year ago, was released Wednesday with information from seven of the state’s 20 circuit courts.

Because several circuits, including Palm Beach County, did not start mediation until July, their numbers are not part of the statewide report. However, an update provided by Palm Beach County Bar Association showed that of 41 mediations that had occurred as of early last month, 10 resulted in a settlement that avoided foreclosure.

Although the data on statewide mediation is not complete, attorneys said there is enough evidence to show the program is struggling.

Of 13,417 cases referred to mediation between March and June, 768 ended with the borrower and bank coming to an agreement. An agreement could include the homeowner agreeing to surrender the property instead of going through foreclosure, a short sale or a loan modification.

“If success is measured on the basis of providing significant financial relief to borrowers, then it has not accomplished that goal overall,” said Michael Gelfand, a licensed mediator and an attorney with Gelfand & Arpe, P.A., in West Palm Beach. “If success is measured in terms of moving cases forward, it’s probably a C-minus.”

One hurdle facing the mediation program is the difficulty in contacting borrowers.

Wednesday’s report shows that homeowners were reached in 44 percent of the cases referred to mediation. Of those contacted, about 38 percent attended a session.

“It’s not always someone ignoring us, it’s just getting them the information and helping them realize we’re not just some company out there to scam them,” said Michael Napoleone, president of the Palm Beach County Bar Association, which oversees Palm Beach County’s mediation program.

Once a homeowner got to mediation, 34 percent walked away with a resolution.

The bank is required to pay for the mediation — a $750 fee per case — and the homeowner must go to foreclosure counseling before the meeting. The mediation must be scheduled between 60 and 120 days from when a foreclosure suit is filed.

In some instances, attorneys said, homeowners don’t want mediation because they have to divulge financial information. If mediation fails, the bank then has a road map to a borrower’s finances.

Lenders too shoulder some of the blame for mediation failures, Gelfand said.

They come to meetings without the appropriate paperwork, no authority to modify a mortgage, or little willingness to write down the principal amount of a loan, Gelfand said.

Fifth District Court of Appeal Judge William Palmer, who is chairman of the Florida Supreme Court Committee on Alternative Dispute Resolution Rules and Policy, compiled the program report.

He said it is too early to judge success or failure and recommends giving it more time before reevaluating.

“Even though the numbers show few were able to come to an agreement, it’s still a valuable program because the homeowners have an opportunity to sit down face to face with the bank and tell their story,” agreed Jeffrey A. Kasky, an attorney and residential mortgage foreclosure mediator with Foreclosure Mediation Solutions in Fort Lauderdale. “If it doesn’t work out, at least they know they got their shot.”

kimberly_miller@pbpost.com