Only 6% helped statewide in foreclosure mediation program

It was supposed to help clear the courts of foreclosures and help people keep their homes.

But the court-mandated foreclosure mediation program in Hillsborough County has only lead to four of 492 eligible cases being resolved during the program's first four months.

It's not simply that homeowners were uninterested.

Mediators complain of calling borrowers only to find they haven't yet been served with the lawsuit. Often, by the time the homeowner gets the suit and decides to mediate with the lender, their case has already been transferred back to court, said Michael Bridenback, court administrator for the Hillsborough court.

"It's not working as well as we all intended," Bridenback said. "You really have to hold the lawyers' feet to the fire."

Hillsborough's mediators aren't the only ones running into trouble. The state's foreclosure mediation program, required by the Florida Supreme Court, has produced such scant results that some question whether it's a waste of time.

Statewide, there were 13,417 cases referred to mediation between March and June, according to a state report. Of those, 768, or 6 percent, resulted in the borrower and lender coming to an agreement. That could include a loan modification or a short sale.

Only seven of the state's 20 circuits submitted data. Hillsborough and Pinellas circuits did not submit information because their programs were too new. But data the circuits provided to the Tribune show their programs have run into roadblocks, too.

In Hillsborough, 212 people were contacted and 12 mediations were conducted between August and late December. Of those, four resulted in a written agreement and eight were referred back to the court to proceed as a traditional foreclosure.

The circuit that includes Pinellas and Pasco counties launched its foreclosure mediation program July 1. It had 4,400 eligible cases and was able to contact 2,180 borrowers. But only 246 of those opted for the mediation. Of those, 73 resulted in an agreement between the lender and borrower.

Representatives from 12 nonprofits charged with managing the mediations for the state's judicial circuits had a conference call Friday morning to discuss the problems. Among their complaints: attorneys for some of the state's largest foreclosure mills turn in sloppy documents, making it difficult to locate borrowers.

When those forms are filed, it starts a 60-day time-frame, in which the mediators have to reach the homeowners and get them to agree to the mediation. But process servers, hired by the lenders' attorneys, to deliver the lawsuits don't always do so in a timely manner, said Dick Rahter, president of Mediation Managers Inc., the nonprofit agency charged with administering the program for the 6th Judicial Circuit, which serves Pinellas and Pasco.

"We had one last week where a lady was not served," Rahter said. "We found her, and she said she wasn't participating in anything until she was served with the foreclosure. What can we do?"

If she doesn't decide to move forward with mediation before her 60-day window closes, she could run out of time.

This isn't the first time process servers and foreclosure attorneys have been accused of sloppy paperwork. The Florida Attorney General's Office is investigating two process servers for questionable affidavits, concerns about service of complaints, and allegations of overbilling and back-dating documents. Four large "foreclosure mills" also are under investigation by the attorney general.

Under the court-mandated program, lenders lenders are required to participate and must pay for the mediation. No taxpayer money is used, Bridenback said.

Lenders who have come to the table "aren't gung-ho" about being there, Bridenback said.

That's the attitude homeowner Michael Michalowicz said he encountered during his mediation in Hillsborough.

"It took an hour for everyone to arrive, and then the lender gave me a horrible offer including thousands of dollars due within 10 days," Michalowicz said. "It was ludicrous. The lender didn't want to help me."

Bridenback, who serves on a committee that monitors the program's success, said his group plans to meet next week and brainstorm recommendations.

"We're probably going to need action from the Supreme Court."

Editor's note: An earlier version of this story reported an incorrect figure for the percentage of people helped statewide through the foreclosure mediation program.