Miami-Dade County homeowners who have fallen two months behind on their mortgage payments will now have a chance to sit down with their lender and hash things out before the foreclosure process begins, the county-approved mediation management center announced Friday.
The Collins Center for Public Policy, which handles the state-mandated mediation process between banks and distressed homeowners, has expanded its program to include borrowers facing the imminent threat of foreclosure.
Ned Pope, director of the Collins Center's mediation program, said reaching borrowers before they fall months behind on their payments and are summoned to court will make negotiations easier.
``A mediation that occurs without involving some kind of lawsuit is always more amicable,'' he said. ``It's a much easier mediation, more of a discussion.''
The process starts when a homesteaded borrower falls 65 days behind on mortgage payments, at which point the lender can contact the Collins Center to set up a mediation meeting with the borrower. The Collins Center also sets up financial counseling for the homeowner. The company managing Broward County's foreclosure mediation program, American Arbitration Association, has not yet instituted early stage mediation.
Dory Rodriguez, who owes $126,000 on her mortgage and believes her Florida City home is worth half of that, attended a mediation this week and learned what options were available for avoiding foreclosure.
``If everything goes fine, we will apply and they will put us in a three-month trial [modification] period,'' she said. ``If we make the payments on time for three months, they will put us in the program [permanently].''
Participation in the program is voluntary and lenders have to foot the bill, but Fannie Mae is requiring all of its loan servicers to take part.
The move toward early mediation comes a year after the Florida Supreme Court mandated all foreclosure cases in the state undergo negotiation before a home is repossessed. The ruling applied to all new foreclosures filed after January 2010, although judges could choose to refer older cases to mediation.
So far, mediation has proved anything but a cure-all. A new report from the Office of the State Courts Administrator found that only 6 percent of distressed homeowners eligible for mediation worked out a resolution with the bank. In Miami-Dade County, that percentage is 5.6 percent. Broward County was not included in the report.
The main problem has been getting borrowers to the table. Homeowners were reached in only about half of cases eligible for mediation in Miami-Dade, the report found. Of the borrowers that actually attended mediation, 32 percent reached an agreement.
Pope believes that getting started earlier will help get the attendance figures up.
``Banks always tell us they can't get a hold of the borrower or get them to call them back and the borrowers always tell us that they can't get in touch with the bank,'' he said. ``The further the delinquency goes down the line, the more difficult it becomes.''
The Collins Center says it has managed 11,000 mediations since March 2009 in the six Florida counties it operates in.
The pre-foreclosure mediations may be helpful to lenders as well, as many are struggling to close foreclosure cases in court due to problems with improperly executed documents and misplaced notes. A mediation settlement -- in the form of a loan modification, a short sale or the borrower giving the home back to avoid foreclosure -- could help lenders avoid the county's lengthy and increasingly complex foreclosure court.
In Miami-Dade's foreclosure court on Friday morning, lawyers for lenders repeatedly asked to push back their trial dates, even as a judge pressured lawyers from the bank to speed things up.
Attorneys for some lenders, like LaSalle Bank, pointed to blanket moratoria on foreclosures, meaning cases will be delayed until the bank can straighten out issues concerning title and document authenticity. Other lenders are playing catch up with new legal counsel after state investigations sidelined large foreclosure legal firms like the Law Offices of David Stern.
Each postponed case remains in the county's record-high backlog, estimated to be around 70,000 cases.
Miami-Dade homeowners interested in participating in a mediation program can call the Collins Center at 1-877-352-2004, or visit www.collinscenter.org.