When Is a Good Time to Mediate in Foreclosure Proceedings?

Struggling homeowners may concede defeat when they are served with foreclosure papers from their lender. After months of sleepless nights, fretting, and trying to work out a solution with their lender, the homeowner’s options to catch up with their mortgage note seem to disappear overnight.

During the height of the 2008 housing crisis that affected the whole country and Florida in particular, every foreclosure case in court had to go through a mandatory mediation process. Some of the circuit courts have continued the practice to this day. This post will discuss the mediation process and why it may be helpful to use to resolve a homeowner’s difficulties with their lender.

How the Foreclosure Process Works

A foreclosure is a legal process overseen by the circuit courts in Florida where the lender forces the sale of a home to satisfy an unpaid mortgage balance debt. Because it is a court proceeding, a foreclosure is initiated by the filing of a notice of foreclosure and complaint. Lenders are required to include in the initial filings a copy of the underlying mortgage note or promissory note.

Once filed, the notice of foreclosure and complaint, with accompanying documents, must be served on the homeowner. Once the homeowner receives the foreclosure papers, he or she has 20 days to file a response or answer. Failure to appear or respond provides the lender with an opportunity to seek a judgment granting their foreclosure request unopposed. It is important to seek legal advice and counsel from a foreclosure defense attorney immediately after being served in order to protect the homeowner’s rights.

I’ve Been Served With Foreclosure Papers – What Now?

Being served with foreclosure papers from your lender is not the end of the road in your quest to get your mortgage payments up to date and hold onto your home. Many individuals battle their mortgage lender prior to the commencement of foreclosure proceedings. For one reason or another, a homeowner’s request to modify the mortgage note or an application for relief through a federal program may be denied despite meeting many of the qualifications on paper.

Is Mediation Right for Me?

Selling the house prior to the foreclosure being finalized or paying off the entire mortgage balance are two ways to stop a foreclosure proceeding without losing your home or investment. Many people in foreclosure proceedings are not in a position to exercise either of these options for multiple reasons, one of which is a poor resale market. A homeowner may be familiar with the concept of mediation, but may not know what mediation is and how it works, especially in a foreclosure proceeding.

What Is Mediation?

Mediation is an interactive process where the parties (homeowner and lender) resolve a conflict (inability to pay mortgage payments) through the use of communication and negotiation techniques facilitated by a neutral third-party, the mediator. The mediator is not a judge; the mediator is a facilitator. He or she has no power to render a judgment or force the parties to come up with an agreement and comply with the agreement. If the parties are unable to reach an agreement during mediation, the dispute is returned to the judge in the circuit court to adjudicate or make a decision on how to resolve the dispute.

Foreclosure Mediation Steps

There are six main steps in foreclosure mediation. They are as follows:

  1. Introductory remarks by the mediator where the ground rules are set, and the purpose of the exercise is explained;
  2. Statement of the problem;
  3. Information gathering and exchange time – both parties share information or documents to help them decide the best way to resolve the problem;
  4. Identification of the problem to be solved;
  5. Negotiating, bargaining, and a “generating options” period; and
  6. Reaching an agreement.

Why Mediate?

Mediation has advantages for homeowners in distress. It can force the lender to the table. In mediation, a homeowner may pursue a loan modification, a short sale, more time to decide what to do, or forgiveness of any potential deficiency judgment if the homeowner is upside down on the mortgage. No matter the reason, a Fort Lauderdale foreclosure defense attorney will work with the homeowner to develop one or more of these strategies in order to get the relief the homeowner seeks.

The Florida Foreclosure Process Is Quick

In 2013, the Florida Fair Foreclosure Act went into effect. This law made substantial changes to the court process of a foreclosure proceeding. For starters, the law speeds up the foreclosure process, pushing cases through the circuit court’s docket in a fast-track tier. One benefit of the law is the minimization of deficiency judgments for the homeowner. Many homes in Florida were upside down during the 2008 housing crisis. After auction, the homeowners were still left with massive debt and lenders pursued deficiency judgments, making it nearly impossible to financially recover from the 2008 housing crisis.

Another benefit of the law is the requirement that lenders include a copy of the promissory note in the foreclosure complaint. Many lenders sell mortgages to debt buyers but are unable to prove in court that they own the mortgage debt that they are collecting.

One downside is that once the foreclosure request is granted, it is nearly impossible for the homeowner to recover the home during the auction sale. Once the lender wins the foreclosure case, it is able to list the house on the market at auction and recover as much of the unpaid mortgage balance as possible. Mediation is a good tool to understand the position of the lender before the judge issues a final decision or judgment of foreclosure.

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Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations.

Contact us for a free consultation to see how we may be able to help you.