Banks Cheer as FL Supreme Court Eliminates Foreclosure Mediation RMFM Program

The mandatory Florida Residential Mortgage Foreclosure Mediation (RMFM) Program was eliminated through Administrative Order No. AOSC11-44 this past Monday the nineteenth, signed into effect by the Florida Supreme Court Justice Charles T. Canady. The program was established on December 28, 2009 by Administrative Order No. AOSC09-54, signed into effect by then Chief Justice Peggy A. Quince. The more recent Order summarized the issue with this statement:

The program was established as a means for the court system to address the overwhelming number of mortgage foreclosure cases coming into the system. The Court has reviewed the reports on the program and determined it cannot justify continuation of the program.

The Order makes clear that mediations can continue to be held, but the programs will have to be run at the local level, such as on a "case-by-case basis pursuant to section 44.102, Florida Statues [sic], and Florida Rule of Civil Procedure 1.700(a)." (links added to the quote from the Order) However, there is no longer a guaranteed right to mediation in the context of a Florida residential foreclosure. The Florida Supreme Court likely relied to some extent on the December 28, 2010 report of the Committee on Alternative Dispute Resolution Rules and Policy which it had directed to compile statistics regarding the RMFM program in the original Order establishing the program. The Committee reported that, for the period of March to June 2010, 13,417 RMFM eligible foreclosures were filed, of which 2,250 mediations were conducted, however only 768 of those mediations ended with a written agreement. This early report suggests that 34% of cases referred to mediation ended with a written agreement.

Where the Committee Report spoke optimistically of the RMFM program, a later report published October 21, 2011 by the Assessment Workgroup for the Managed Mediation Program for Residential Mortgage Foreclosure Cases indicates a less positive outlook. The Assessment Workgroup noted that many areas of the RMFM program were in need of improvement, including areas such as borrower attendance, document integrity, document exchange procedures, and fee structure. This same report indicates that servicers often did not provide representatives with full authority to settle, and would refuse to consider very many options to resolve the foreclosure. Furthermore, the report notes that servicers "had economic incentives not to settle and to keep foreclosure cases in limbo to avoid the expenses that accompany home ownership." The report also notes that borrowers often "mistrusted the program and were uncertain about its legitimacy." Clearly the program suffered from a number of weaknesses.

There is a certain amount of irony in the elimination of the RMFM program. One of the prime reasons for the implementation of the RMFM program was to force Lenders to come the bargaining table, where the homeowner often had very poor results in their attempts to negotiate with the bank pre-mediation. One of the main reasons for the failure of the RMFM program, and thus its elimination, has been related to poor participation on the part of the Lenders, as evidenced by the October 21, 2011 report. Hopefully the individual Florida circuit courts will step up and impose effective foreclosure mediation programs on their own to aid the hundreds of thousands of families currently facing foreclosure in Florida.