Shortcomings of the Residential Mortgage Foreclosure Mediation (RMFM) Program recognized by Panel

Written By: Emil FleysherOctober 30, 2011,

Florida Residential Mortgage Foreclosure Mediation Program (RMFM) is failing to help modify loans in foreclosure.

In fact, Florida Supreme Court Chief Justice Charles Canady assembled The Assessment Workgroup for the Managed Mediation Program (RMFM) in September. It was in response to news that only 3.6% of cases eligible for mediation had settled in almost two years; since the start of the program. Furthermore, the group has recommended the abolition of the mandatory foreclosure mediation program. And, replacement with a plan that allows courts to opt into the program. This conclusion ran counter to a majority of public opinion which suggested the program should continue.

The group’s findings and their conclusion do not come as a surprise. In my experience, not a single settlement has been reached at one of these mediations. Among the many problems with the mandatory mediation program is that it has to take place at the beginning of the litigation process. At this early stage, little is known about the case. And, there is not enough time to establish who the party with authority to enter into a settlement is on the plaintiff’s side.

Two Additional Major Weaknesses

Furthermore, the group identified two additional major weaknesses… low borrower participation and a lack of economic incentives for lenders. Banks avoid settling with borrowers in mediation because foreclosure lets them tap the Federal Deposit Insurance Corp.; which guarantees the original mortgage amount. Also, servicers have an economic incentive to avoid settling because they earn fees while a foreclosure case in ongoing.

The vast number of mediations has had the effect of clogging the courts. The proposition of the Bills occurred to streamline foreclosure law and having an opt-in system would further help clear out the clog. But some have asked if there should really be a rush to fix the clogged system. A family that will be homeless is better off if they can stay in their home for an extended amount of time. And, banks hesitate to take possession of foreclosed homes because of the expenses and liabilities they take on. Presentation and implementation of a change in the current mediation requirements will happen sometime next year.

If you have questions about Foreclosure, Loan Modification, or Bankruptcy, please feel free to call my office at 954-484-9987. Or, send an e-mail to, or complete the contact form below.

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