Posted on Tuesday, December 29, 2009
A Homeowner’s Guide to Florida’s Foreclosure Mediation Process
Now that the Florida Supreme Court has ordered that Banks foreclosing on homes in Florida try to resolve the mortgage loan default by mediating a loan modification, many of you may have some important questions. Here are some answers explaining what it all means to you.
Do the New Mediation Requirements Apply to You? If (A) You own and live in the property being foreclosed, (B) Your mortgage loan falls under the federal truth in lending regulations (if you are not sure, look at the documents you signed at closing, if they include a Truth In Lending Disclosure you qualify), and (C) he bank filed the foreclosure case against you after yesterday, then the new mediation requirements apply to you. If you live in Escambia, Santa Rosa, Okaloosa, Walton, Miami-Dade, Martin, St. Lucie, Okeechobee or Indian River County you may still be entitled to mediation since those areas have been using mediation in foreclosures cases for some time already.
What is Mediation Anyway? In a nutshell, mediation involves an objective intermediary (the Mediator) sitting down with both sides to help them communicate, find common ground, and hopefully resolve a disagreement. Its is generally entirely voluntary, confidential and fair.
Who is Going to Contact You About Your Mediation? The Mediation Service Coordinator will be a non-profit and politically and professionally neutral organization. Their role is to receive mediation referrals from the court, reach out to homeowners, assign mediators to each case, facilitate the exchange of documents between homeowner and bank, schedule the mediation itself and provide a location, and then communicate the outcome to the court. The person who contacts you will work for this organization.
Who Will Your Mediator Be? The Mediation Service Coordinator is supposed to post a list of all it’s Mediators on it’s website. The Mediation Service Coordinator will appoint one of it’s Mediators to serve as your Mediator. You can Google your Mediator to learn about her experience and expertise in foreclosure, real estate and mortgage cases. If you would like, you can request a particular Mediator who you believe is qualified and will do a good job. You and your Bank can also agree to mediate your case on your own, not using the new court required procedure or mediators.
What Should You Expect On the Day of Your Mediation?
• Arrival. You should plan to arrive at the Mediation Service Coordinator office a few minutes ahead of your scheduled mediation time. If you have an attorney he or she should meet you there. There will normally be coffee and water available. You will also have access to a rest room. Since the mediation will normally last between 1 and 3 hours, you may want to bring your own soft drink or snack.
• Privacy. You will be directed to a private conference room where you will be introduced to your Mediator and to the Bank’s lawyer. The Mediation Service Coordinator will confirm that all parties are present. In most cases the representative for the Bank will attend by speaker phone. All discussions will be confidential.
• Introduction. The Mediator will explain how the mediation will work and tell you a little bit about herself.
• Negotiations. After that each side will explain their position. The Bank may ask questions about the financial information you provided so it is advisable to bring copies of everything with you. If the Bank has all of the information needed the representative on the phone will normally be able to tell you the type of loan modification they can offer. If the Bank does not have all of the information needed, they will normally try to get what is needed during the mediation (you will often be able to fax them anything that is missing at that time) and make a modification offer. If the Bank does not have and is unable to get all of the information they need from you at the Mediation the attorneys will normally make arrangements to exchange the needed information and try to accomplish a modification within the next few days. Modifications under Making Homes Affordable will be for an initial 3 month trial period. During this process either side may ask for time alone with his or her attorney (called a “caucus”). Because the process in a nutshell involves you telling the bank what you can afford and the bank telling you whether you qualify for a modification and if so what type, in truth there is very little negotiation pers involved in this particular type of mediation.
• Mediator Report. At the end of the Mediation the Mediator will complete a form reflecting that either the case has been “Settled” (if the Bank is able to offer a modification which you accept) or that the parties have reached an “Impasse” (if the Bank does not yet have all of the information needed, you do not qualify for a modification, or the modification offered is not acceptable to you). The Court will be notified of this outcome and, if it is an Impasse, the foreclosure case will be allowed to move forward.
What if You Don’t Want to Mediate? You don’t have to mediate if you don’t want to. If you (A) notify the Mediation Service Coordinator that you do not wish to mediate, or if (B) you are required to but do not attend foreclosure counseling or, (C) do not complete or submit the required financial forms, or (D) do not show up at mediation or the Mediation Service Coordinator cannot reach you, you will be deemed to have “opted out” of the mediation program.
HOMEOWNER’S MEDIATION TIMELINE
• Bank Files Foreclosure Suit: Must now attach mediation form/pay mediation fee
• 1 Day Later: Bank e-mails mediation form to Mediation Service Coordinator
• Mediation Service Coordinator will then provide financial forms for the Homeowner to complete and help the Homeowner arrange a meeting with a financial counselor (only Homeowner’s with high debt compared to their income are required to meet with a financial counselor).
• 60 to 120 Days Later: Homeowner meets with financial counselor.
Homeowner returns completed financial forms to Mediation Service Coordinator (forms must be returned no later than 5 days before Mediation) who then provides copies to Bank.
Mediation Service Coordinator schedules Mediation date, time and place and notifies Homeowner and Bank.
Homeowner has right to request proof Bank owns the Mortgage, history showing how all payments were applied, Bank’s estimate of current value of home, Bank’s most current appraisal (request must be made no later than 25 days before Mediation).
10 Days Later; Mediator’s Report is submitted to Court