Certain Non-Owner-Occupied Homes Eligible For New Florida Statewide Foreclosure Mediation Program

A review of the Florida media reports announcing the recent institution of a statewide foreclosure mediation program for foreclosure actions reveals that some of the stories may be creating an incorrect impression that the program applies only to owner-occupied, homesteaded properties, or are silent as to the affect on homes that are occupied by individuals other than the owner-borrower.

With respect to homesteaded properties, the program applies automatically, unless the lender and owner-borrower both agree to opt-out or unless effective pre-suit mediation that substantially complies with the managed mediation program requirements has been conducted.(1) The foreclosing lender is required to foot the upfront outlay for the cost of the mediation, and which is recoverable in the judgment of foreclosure.

With respect to non-homesteaded residential properties occupied by individuals other than the owner-borrower, a reading of the plain language of the Administrative Order indicates that, while not automatically applying to such properties, it allows the owner-borrower to opt into the program. The owner-borrower is required to split the upfront outlay for the cost of the mediation with the foreclosing lender.(2)

The mediation program does not apply to vacant homes,(3) and apparently, also does not apply to a home occupied by the owner-borrower as a "second" (ie. non-primary, vacation, etc.) home, although neither the Florida Supreme Court's Administrative Order, nor the Report of Florida Supreme Court’s Task Force on Residential Mortgage Foreclosure Cases expressly mention non-primary, "second" homes.(4)

Click here for the Administrative Order of the Florida Supreme Court.

(1) See Administrative Order, page 2-3: "Under this program, all foreclosure cases in the state courts that involve residential homestead property will be referred to mediation, unless the plaintiff and borrower agree otherwise or unless effective pre-suit mediation that substantially complies with the managed mediation program requirements has been conducted."

In addition, the Order provides that "A borrower may opt out of the process by declining to participate upon being contacted by the mediation manager, or by not completing the pre-mediation requirements of foreclosure counseling and submission of financial documentation to the mediation manager." Administrative Order, page 4.

(2) See Administrative Order, page 9-10: "The Court further approves the Task Force recommendation that cases involving properties that are occupied by individuals other than the borrower may opt into the managed mediation program, at equal cost to the parties, and that structural improvements, such as open calendars, be employed by courts to allow cases to move as quickly and smoothly as possible."

See also, Report of Florida Supreme Court’s Task Force on Residential Mortgage Foreclosure Cases, page 41: "These cases may be either tenant-occupied or occupied by other members of the family but not the borrower, or have unspecified occupants. [...] The Task Force recommends that these properties be given the choice to opt into managed mediation at equal cost to the parties."

(3) For owners of vacant homes that are delinquent on their mortgage payments, not yet in foreclosure, and wish to be covered by this mediation program, there appears to be two options:

• Move into the home and, in good faith, make it your primary (not secondary) residence, in which case the mediation program is mandatory (see footnote 1, above), or
• Stick a tenant, family member, or "unspecified occupant" in the home (again, in good faith), in which case the owner-borrower, according to the Order, could opt into the mediation program upon commencement of the foreclosure action (see footnote 2, above).

(4) For owner-borrowers of non-primary, "second" homes that are delinquent on their mortgage payments, not yet in foreclosure, and wish to be covered by this mediation program, renting out the property to a tenant or letting a family member use the premises might, arguably, allow the owner-borrower to opt into the program upon commencement of the foreclosure action (see footnote 2, above).