Foreclosure Defense Florida

Florida Supreme Court Orders Mediation- Lenders Don’t Care

The headline from today’s front page of the Saint Petersburg Times reads,

“Effort To Save Homes Lags”

The headline should read:

“Mediation Will Not Solve The Foreclosure Crisis And it May Make Things Worse For Homeowners”

The full text of the article, in which I am quoted, can be found below, and I encourage everyone involved in foreclosure to read the article in full

Saint Petersburg Times Article Here

I have several concerns related to the mediation process in foreclosure.   First, although the Supreme Court rules mandate that the lender’s representative appear at the mediation and have full settlement authority, many of these lenders are in fact going to be constrained by the current modification requirements that prevent any significant number of modifications from being approved.   The Supreme Court can order mediation, but only federal intervention can force a change in the modification parameters that will allow them to be successful in any meaningful numbers.   Accordingly, I expect the response from lenders to the Supreme Court’s new rules will be, “You can force us to the mediation table, but you cannot force any meaningful mediation to occur.”

A second issue that any party considering a modification must consider whether the modification is issued in mediation or outside mediation is the modifications I have seen thus far do not offer any significant reduction for the homeowner.   While any bit of relief is helpful, buried in the small print of most modifications is language that forces the homeowner to give up many of the rights and defenses that homeowner may have in a typical foreclosure defense.   As a result, lawyers and their clients need to think long and hard before agreeing to any modification, either in mediation or not.

Bottom line is while mediation may relieve some of the pressure on courts….at least for the short term…mediation will do precious little to solve the fundamental problems that exist within the system.

8 Comments

  • Andrew says:

    Clearly the Supreme Court is largely unaware of the intricacies of securitization. Otherwise, they would understand how mediation is just setting the homeowner up for what could be even larger problems. I am sure their intention is meant to bring the two sides together to hammer out an affordable payment. But there has been a real fraud committed against borrowers and mediation will not expose it.

    • That’s the real problem….and most mediation agreements and modifications are going to have the borrower signing away the rights to challenge these issues later.

      • Jennifer says:

        That’s right Matt. That is where my husband and I are at. This is the 3rd mediation that the Judge has Ordered from Stern’s office and they keep ignoring the Order. Judge let us choose the mediation date for April 16th and Sterns office just now sent the financial packet the day before for us to complete. Obviously, we are not doing it and have let the court know to reschedule. The REAL problem where I go with the whole thing, is who wants to modify a loan when the assignment is illegal to begin with—Judge doesn’t want to touch on that yet! let me know if you want to help us. We are fighting pro se over here. Foreclosure started in 2007.

  • They (borrowers) are getting sandbagged while the Atty MILL steamrolls right over them & their Constitutional Rights. They sent us over a MOD agreement with a deep “release of liability” clause to include any predecessor, successor, officer, director, employee, etc. etc.

    Sad part is, we had no income at the time… who pushes mods on people with no income to show? Shows you exactly what the intent is there huh. Mods do work good for some people but they are only the folks that can show income.

    I’d like to know how they get away with passing a clean bill of title on a short sale though? As a loan servicer selling at a loss, are they communicating with a third-party(ies) on the deal? Shouldn’t they have to prove they have the right and the authority to sell on behalf of the investor?

    Realtors are pissed because a lot of them work 6 to 8 months trying to get short sales closed, only to have the “servicer” cancel the deal two days prior to a scheduled closing. They’ll sell it a year from now for less than they could have got today, so WTF?

    • The release language that you referenced is in practically every single release that I’ve ever seen in any lawsuit, not just foreclosures. It’s standard language and is very rarely modified. For the most part, I don’t have a problem with it and in many cases it actually does make sense.

      I do share Matt’s concern though in terms of affirming the debt, and IMO, a bigger issue even would be language that has the defendant consenting to a judgment in the event of a future default on a modification. That’s a problem.

      I just mediated a case that resulted in a modification and the terms of such were very fair and both sides were very happy with the outcome. However, I agree that modifications are often not in the best interest of either side, and in those cases there are other solutions to be considered in the mediations.

      https:www.facebook.com/MediatorKen

  • Andrea Guice says:

    …but, is it legal for banks to negotiate any mediation, though after forensic audit the loan has proven fraudulent components, and wouldn’t that cause an illegal act to the borrower, called “aiding and abeting” to negotiate with a known “fraudulent instrument?” shouldn’t the courts “nullify ALL fraudulent mortgage loans” and free the Court of waste, fraud and abuse caused by these banks/lenders? and stop these fraudulent foreclosures altogether? … mediation process must address the FRAUD within the “mortgage instrument!” …mediation with any fraudulent instrument is just WRONG!!!. AGuice

  • They aren’t really worried because those already with serious financial problems aren’t going to pay more and get deeper into debt.

  • Peter Crane says:

    Sept 9, 2011. Unfortunately Matthew is correct. Although my experience with mediation as per Administrative Order SC09-54 is different than any of the above comments. I was ripped off $1,294 for a 15 minute mediation that was misrepresented as free to the borrower. The worst part of the fiasco in that in May 2011 I received my 30 day letter by attorney representing Wells Fargo for just under $2,000, which I was prepared to pay and bring the mtg acct to current, when I received a letter and calls from the American Arbitration Association informing me of Administrative Order SC09-54. Since I new nothing of AAA or the Supreme Court order, I asked how a mediation hearing would benefit me since I already received a modification in June of 2010, which I was happy with, and that my intent was to Bring the acct current before the 30 days expired. I was told by AAA (and in writing) that if I agreed to the mediation I would have more time to get the funds since the lender CAN DO NOTHING until the mediation hearing, at which time I might be able to negotiate late fees and attorney fees connected to the 30 day letter. I was told that the meeting might take place in 2 or 3 months. My main concern was the possible cost to me for this mediation. I was told repeatedly and in writing and I quote from the AAA brochure, “THE LENDER PAYS THE FEES FOR THE PROGRAM, SO THE HOMEOWNERS DO NOT HAVE ANY OUT-OF-POCKET EXPENSES.” Also, the letter from AAA states, “YOUR LENDER HAS ASKED AAA TO CONTACT YOU REGARDING YOUR INTEREST IN PARTICIPATING…” Wells Fargo denied ANY knowledge of AAA nor did they request AAA to cantact me. The 15 minute mediation total cost was $5,140, instead of under $2,000 in May without the mediation. I was charged late fees by Wells Fargo of $174.00 from the May “30 day letter” to the August hearing, even though AAA lead me to believe the lender could take NO ACTION until the hearing, $80.00 in misc hearing fees and a $1,040.00 fee for the 15 minute meeting charged by the attorney representing Wells Fargo. I have written to my Congressmen, The Attorney General, OCC, and newspapers. I am als preparing a complaint to the Florida Bar. ANY ADDITIONAL SUGGESTIONS WOULD BE APPRECIATED.

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