, 2011. “The program was established as a means for the court system to address the overwhelming number of mortgage foreclosure cases coming into the system. The Court has reviewed the reports on the program and determined it cannot justify continuation of the program. Accordingly, … the statewide managed mediation program is terminated,” wrote Canady.
FLORIDA MANDATORY MEDIATION PROGRAM Florida Supreme Court Chief Justice Charles Canady terminated the mandatory foreclosure mediation program on December 19th
Created in 2009 by Administrative Order 2009-065, the state of Florida updated various foreclosure procedures and forms to implement a mandatory mediation program for homeowners whose primary residences were in foreclosure. The Administrative Order was meant to address the increased volume of mortgage foreclosure cases throughout Florida.
Mediation, a form of alternative dispute resolution, is typically a cost efficient way for adverse parties to resolve their disagreements without resulting to prolonged litigation. The mandatory mediation program had its benefits: the lender was responsible for paying the fees for the mediation and, ideally, the mediation would result in a settlement or modification that would stop foreclosure. The program also had its challenges: the mediations that occurred under the statewide managed mediation program were resulting in a “no compromise” in over seventy percent of cases. This left the majority of participants in foreclosure without any resolution – the exact opposite result of the program’s intention.
With the December ruling by the Florida Supreme Court, it will once again be left up to the discretion of local state judges to determine whether mediation will be a beneficial and cost efficient way to resolve or settle a foreclosure dispute.
SPEEDY FORECLOSURES IN FLORIDA In early March 2012, the Florida House of Representatives passed HB 213 – An act relating to mortgage foreclosures. HB 213 proposed sweeping changes to Florida’s foreclosure process in the state of Florida:
The Bill would reduce the statute of limitations for deficiency judgments (the time period in which the lender would have to sue) from five years to one year. However, the reduction in the limitations period only applied to a foreclosure sale or deed in lieu of foreclosure. There was no mention of a reduction in the limitations period following a short sale. Accordingly, it is this author’s opinion that lenders would still have 5 years following a short sale to recover any deficiency.
The Bill would have created additional allegations in the foreclosure lawsuit itself regarding the identity of the entity that owns the note; who is entitled to enforce the note; and the servicing agent. The Bill also imposed sanctions against a plaintiff for failure to comply, but the sanctions did not go so far as to invalidate the mortgage foreclosure itself.
Homeowner and Condominium Associations were included in the Bill, which would define them as “lienholders” and allow them to use the expedited procedure identified in Florida Statute, Chapter 720. The expedited procedure allows the lender or any “lienholder” to apply to the Court for an Order to Show Cause why
foreclosure should not be entered; thus shifting the burden to the homeowner to prove why the foreclosure should not be entered, versus the bank to prove why foreclosure should be entered. There are some practical procedural issues with this section of the Bill. For example, what if the association were to speed up the foreclosure, but the lender failed to file those documents necessary to obtain judgment?
In the case of a non-owner-occupied house, the Bill would allow the lender to apply to the Court for an order directing the occupant to make payments to the lender directly, or be evicted from the premises. Again there was no discussion as to how this provision would impact current Florida Law allowing the homeowner or condominium association to collect rent from a non-owner-occupant in cases where the association payments fall behind.
Finally, the Bill would allow expedited foreclosure procedures against non-owner-occupied homes in Florida. It should be noted that these provisions failed to rise to the level of a “non-judicial” foreclosure; the Bill still required that the case be brought before the Circuit Court. However, it would also expedite the processing of a foreclosure dramatically reducing the time for a lender to foreclose – sometimes as long as two years or more.
While there were both some good and some bad provisions in this Bill, it only passed the Florida House of Representatives. The Senate failed to approve the Bill during this latest general session that ended on March 9, 2012. Therefore, speedy foreclosures will have to wait until the next Legislative session.
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