Broward Foreclosure Mediation Program Tries to Help

Tuesday, August 17th, 2010

Mar 31, 2010 12:06 am US/Eastern

Broward Creates Foreclosure Mediation Program

A new program is in the works to help Broward County homeowners save their homes from foreclosure. Later this summer, a mediation program will go into effect, aimed at bringing struggling homeowners and banks together as soon as a foreclosure action is filed. The program is the result of a study by the Florida Supreme Court seeking ways to reduce the crushing backlog of foreclosure cases in the courts and find solutions to the foreclosure crisis. Broward County Chief Judge Victor Tobin put together the mediation program for Broward County, which has 40,000 pending foreclosures in the court system. "The hope is that the bank, together with the homeowner, at a neutral site can sit down with someone with authority to work out the loan and work out a payment schedule," Tobin told CBS4′s Carey Codd.

Tobin says the most important element is for the banks to have a person with the authority at the mediation table to modify loans or find solutions to homeowners' problems. The program will work like this: Once a foreclosure case is filed, it will be referred to a case manager from the company handling the mediation program, American Arbitration Association. The homeowner will be notified and, if they agree to mediation, will undergo credit counseling sessions.

The homeowner and the bank will begin the process of trying to work out a resolution, which could mean reducing principal, reducing the interest rate or letting go of the home. There is no guarantee each case will come to a resolution. The process is expected to take 4 months. The cost of the mediation sessions -which could cost up to $750 — will be borne by the bank that files the foreclosure action.

India Johnson, Senior Vice President of American Arbitration Association, said they will encourage homeowners to take part in the mediation program. She said they have seen success rates of 50-60% when homeowners and lenders get into the same room to work out a solution to a foreclosure. "(We're) trying to bring order out of chaos," Johnson said. "Have someone nudging, nagging and organizing the parties."

Michael Sherman is hoping the program is a success. He has been struggling through foreclosure on his Ft. Lauderdale home for the past two years. Sherman suffered two heart attacks and couldn't work. Then the recession hit his interior design business hard. He said his home, which he bought in 2001 for $305,000, is now worth $150,000. "I have some hope at this point but it's been a long road," Sherman said. "I'm hoping this helps to change things for people. I hope it helps change things for me." Sherman has poured $80,000 into fixing up his home and doesn't want to lose it. "That roof over my head is the only place for me to be," he said. "It's as simple as that."

Foreclosure defense attorney George Castrataro is representing Sherman. He believes the mediation program will help homeowners facing foreclosure but he says the ultimate success depends on the banks. "Are lenders really going to be willing in mediation to do things like change the principal, reduce the interest rate to address really large past due balances to allow people to stay in their homes," he said. Castrataro also said homeowners need to do some soul searching before reaching the mediation table. "For homeowners they have a difficult decision — are they gonna keep their house or decide if they're gonna surrender it?" he said.