Florida Lenders Withhold Critical Information at Pre-Foreclosure Mediations

In 2009, the Florida Supreme Court created a mandatory pre-foreclosure mediation program, which allows borrowers and lenders to discuss possible solutions before legal proceedings begin. Although there has been some success with both parties reaching agreements outside of the courts, this success has been limited, sometimes by a lack of response to information requests. While mediation can provide valuable resolutions, both borrowers and lenders must participate and comply equally with this process in Florida.

Value of Mediation

As a form of alternative dispute resolution, mediation can be useful in resolving many types of conflict. This method employs a third-party mediator whose main goal is to facilitate an agreement between two parties. When the number of foreclosures in Florida reached an all-time high in 2009, the Florida Supreme Court looked to mediation to help contain the crisis. Lack of communication early in the foreclosure process between borrowers and lenders was the main problem the court identified in preventing resolution prior to foreclosure litigation.

Limited Success

According to a Florida Supreme Court analysis late last year, only around 6 percent of reported pre-foreclosure mediations end with an agreement between borrowers and lenders. Broward County reported the slightly higher figure of 12 percent. Although these figures do not indicate how many mediations were cancelled or delayed, they do show the limited success parties have had in resolving foreclosure disputes using this process. One reason for this may be a failure on the lenders’ part to disclose critical information.

Concerning Behavior

There is a Florida court order giving residential borrowers the right to request a plaintiff’s disclosure prior to pre-foreclosure mediations. The disclosure typically covers payment history, property appraisal, the mortgage loan’s net value, and bank ownership evidence. However, some lenders or their loan servicers have neglected to provide this information in the 5 to 10 business days before mediation, depending on county requirements. Mediations may occur without these documents, but this leaves homeowners at a disadvantage.

Get Legal Help

One factor that may help to improve the success of pre-foreclosure mediations may be to hold lenders more accountable for providing the requested disclosures to borrowers, free of flaws and inaccuracies, prior to scheduled mediations. Some Florida foreclosure defense attorneys cancel mediations until the correct paperwork is received by their clients and then reschedule the mediations. While it is true that lenders may be overwhelmed with the hundreds of thousands of backlogged foreclosures clogging the system, borrowers should have the critical information they need to try to save their homes in a bad economy. If you have questions about the foreclosure process, contact a Florida foreclosure attorney today.