Report Issued by Statewide Managed Mediation Program Assessment Workgroup

In an earlier blog, I wrote about the Florida Supreme Court’s appointment of a “Statewide Managed Mediation Program Assessment Workgroup” to examine the statewide residential foreclosure managed mediation program data.  The Workgroup recently submitted its report to the Supreme Court.  You can obtain a copy of the report here.  The report is worth reading in its entirety, but I will touch on a few key points.

After consideration of the available program data, public comments, chief judge input, and other information, the workgroup voted to: (1) eliminate the mandate for a statewide managed mediation program; and (2) allow circuits to opt in to a new, revised uniform model administrative order, either as an exclusive approach or in addition to referral of cases to mediation on a case-by-case basis under relevant court rules and statutes.  The workgroup concluded that for those circuits that choose to continue a managed mediation program, adherence to a modified model administrative order is important to maintain consistency throughout the state. In those circuits that choose not to opt in to a modified model administrative order, the chief judge should be responsible for devising a plan for discontinuing the local managed mediation program.

The workgroup recommends that the Supreme Court establish a separate workgroup to develop modifications to the order, including the following:

• Require borrowers to affirmatively opt in to the program upon service of suit papers

• Develop steps to improve the integrity of borrowers’ financial information and to identify the appropriate lender contact

• Develop steps to improve performance on document exchange and document review

• Review and update document exchange requirements for both parties

• Clarify the correlation between bankruptcy and participation in the program

• Explore options for sanctions for noncompliance by either party

• Explore fee reductions, including borrower contributions to fees, borrower payment of foreclosure counseling fees, and reduction of overall program costs

• Develop data mechanisms to track post-mediation settlements

• Shorten the time frame for completion of mediation

• Eliminate the mandate for referral of all residential mortgage foreclosure cases to the program.

• Examine the manner in which the results of mediation are reported

Interestingly, the Report states anecdotal evidence suggests that the percentage of foreclosure cases resulting in settlement would “materially” increase if data could be obtained for cases at which an impasse is declared at mediation. Later, the Report states that other features of the managed mediation program explain why a “significant” number of cases settle after impasse is declared at mediation. That is not consistent with the anecdotal evidence I have heard, but I also recognize that most of what I have heard comes from the 17th Judicial Circuit in Broward County.

It should come as no surprise that the comments from the plaintiffs’ lawyers are mostly in favor of ending the mandatory mediation program. Conversely, the comments from mediators and defense lawyers are overwhelmingly in favor of continuing the mediation programs.

A more successful mediation program would benefit both homeowners and lenders, but it remains to be seen whether the suggested changes will actually translate into positive results.