Foreclosure Mediation

According to an article in the Star-Telegram, some legislators are pushing mandatory mediation to resolve lender/borrower foreclosure disputes. Will it work in Dallas-Fort Worth?

The article examined the case for it in Florida:

“Florida’s courts are currently trying to cope with more than 290,000 foreclosure cases… A majority on the high court’s Task Force on Residential Mortgage Foreclosures recommended trying mediation on owner-occupied homes before cases go to court, with lenders picking up the tab. Borrowers would be contacted by phone and mail and asked to participate. The high court did not immediately act on the proposal.”

But lenders don’t want to pick up the tab to mediate foreclosure disputes. They want at least a 50/50 split of expenses with the borrower.

“Minority members said mediation should be offered only if ordered by a judge, and the costs – an estimated $750 per case – should be split 50-50 between lenders and borrowers.”

There are a few concerns with mandatory mediation in foreclosure disputes. I would be concerned about the cost forced upon the borrower facing foreclosure. Foreclosure is an expensive process for the lender, by using mediation, mortgage lenders would save millions AND shift part of the expense to borrowers if a 50/50 split of costs are required.  Also, I’m concerned about the objectivity of the mediators. We’ve already had arbitrator cases where there was an obvious bias against debtors.  We cannot allow a repeat of that problem if we require mediation for foreclosure disputes. Maybe mediation managed by judges would work