As federal government foreclosure prevention programs meet with mixed success, a mortgage mediation program is being expanded in Florida to aid troubled homeowners.
The Collins Center for Public Policy, a Tallahassee-based think tank, has been facilitating post-foreclosure filing mediations between lenders and borrowers in six Florida circuit court districts since 2009, but began working on pre-file mediations in January.
The expansion of the program allows the Collins Center to help more homeowners earlier in the process, before they can dig themselves into a larger hole. Unlike federal foreclosure prevention programs, the mediations are lender-initiated and lender-funded.
From a mediation perspective its always better when you have two willing parties, said Ned Pope, a vice president at the Collins Center and director of the mediation program.
Under the pre-file program, lenders initiate the mediation process by notifying the Collins Center after a homeowner falls two months behind on their mortgage. The Collins Center determines if a borrower is eligible for mediation -- the home must be a homesteaded property and located in the 1st, 10th, 11th, 12th, 14th, or 19th Circuit Court Districts, where the Collins Center operates.
Most successful mediations are concluded by extending the length of the loan or increasing the interest rate in later years, but some have received principal write-downs, Pope said.
It gives (lenders) the ability to be innovative and to try different things, Pope said.
Since February 2009, the Collins Center has completed 12,211 mediations in all six judicial circuits. Some 6,608 mediations reached a settlement, 1,293 were settled during the scheduling process. Forty percent of cases that went to mediation were settled. If you count settled prior cases, that number goes up to 50 percent.
Banks and lenders buying into the mediations have aided the Collins Center, but the program was not immune to one of the problems that has hampered government foreclosure prevention programs -- full disclosure and participation from mortgage servicers. Pope says thats because mediations require lenders to prove who owns the mortgage, a proposition that has proven difficult in the wake of the robo-signing controversy.
That was a big impediment early on. The lending institution has to produce the note at the mediation, Pope said.
It was discovered in October that many lenders were using foreclosure mills -- law firms that conducted scant review of foreclosure paperwork in an effort to push through as many cases as possible, forging signatures in some instances. Florida Attorney General Pam Bondis investigations into four alleged foreclosure mill law firms --begun by her predecessor, Bill McCollum --are ongoing.
Now banks, many of which imposed a temporary moratorium on foreclosures in the wake of the scandal, are carefully reviewing their foreclosure documents, creating a possible bottleneck of new foreclosures that are poised to hit a court system in Florida already overrun with foreclosure cases.
That means foreclosure prevention is more crucial than ever, but a federal program is having trouble getting off the ground in Florida.
The Sunshine State has received $1 billion in federal funds as part of the Hardest Hit Fund program designed to give unemployed or underemployed homeowners bridge loans until they get back on their feet. A pilot program launched in Lee County in October was supposed to be a prelude to a statewide rollout of the program in February, but the statewide expansion has been delayed at least one month to get computer systems used in the pilot program in sync for the expansion.
We also understand theres a lot of people out there that are waiting for this program and we get that, said Cecka Green, director of communications for the Florida Housing Finance Corp., the state agency in charge of the program.
In order to qualify for the Hardest Hit program, a homeowner must be unemployed or underemployed, own only one home, and be less than six months past due on their mortgage.
As of Feb. 22, the pilot program received 1,067 applications. Of those, 114 have received loans and 12 others have been approved to receive funds. One application was denied, 304 were ineligible, 172 were cancelled due to homeowner inactivity, 51 were cancelled by the borrower, 44 are currently being reviewed by lenders, 86 are in underwriting and 293 others are being processed to determine their eligibility.
Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.
