Newest Foreclosure Potential “Scam”- Foreclosure Mediation

Developing story….

At 5:48pm today (after business/court hours) September 23rd I received a Notice of Mediation filed by a mediator in one of our foreclosure client’s cases.  As this is an active case I obviously cannot name company names or any details.

I look, and say huh? Mediation, what mediation?   We were just in court on this case a month ago for case management and no mediation was mentioned or ordered by the judge.  I looked back in my emails and saw the mediation company attempting to contact me back in June on behalf of the servicer wanting to sit down and work something out.  Great, but a few things have to happen before mediation.  The client has to fill out a modification package so there is something to talk about.  The client has to pay my firm for the time for mediation, even if the bank is covering the mediator’s cost.  I still had no answers yet, so I had not contacted them back to schedule a mediation.

Now, out of the complete blue, a mediator from this company files a Notice of Mediation for THIS COMING MONDAY SEPTEMBER 29th IN THE MIDDLE OF THE AFTERNOON; 3 business days notice in a distant county.   My office address in on all of my emails, so it is/was not a secret that my office is far south of this county the case is in.  This mediation company’s prior response was, “well we can do it in your county.”  Yes, but my client lives up there, this does not solve the issue.

So I look a second time.  No contact from this mediation company since June, but yet they decided to go ahead and schedule a meditation, without coordinating a date and time with my office, and with a whole 3 business days notice and proceed to FILE IT WITH A COURT.  What about my schedule? What about my client’s work schedule?  Apparently they do not matter.

Now remember for those who do not know, in Florida mediators are lawyers.  So there is no excuse that this was done with lawyers overseeing the process and knowing the proper way to coordinate hearings/matters with all parties before simply scheduling.  In my opinion, this was a fraudulent filing with the court by this mediation company/lawyer/mediator.  But I digress.

From a reasonable perspective, it sounds to me like they are HOPING that by giving mere days notice and not coordinating that my firm and client will not show and they can call it a no-show and collect their mediator fee from the bank.  If this is the new “scam,” then it is completely unethical as again, these are lawyers who are the mediators.  It sounds like even a “neutral mediator” is not acting impartially and for both parties’ interests, but rather to get their couple hundred bucks and hope no one shows up to get paid for zero work.

I have responded back that under no circumstances will myself or my client be attending this mediation Monday due to complete lack of coordination or timely notice to us and to withdraw the mediator’s Notice of Mediation immediately.   This company asked if I withdrew from this case since I filed a motion to withdraw, but clearly there is no order if the docket was checked and per the last hearing.  Presumably, this will be the excuse why my office wasn’t called first; and of course my response will would the smart thing not have been to ask me this BEFORE going ahead and scheduling something 3 business days away?

This just bolsters my thoughts that this company is only interested in getting the fee from the bank and doing no work; and I will refuse to use these mediators if we in fact do mediation at a later date in this case.  We will see how they handle this now.

Update….Mediation cancelled.  I have half a mind to report this mediation company to the Florida Bar for their completely unethical actions.  I will definitely never give this company my business in the future under any circumstances.

H.R. 5148- Congress’ Newest Blunder That May Cause Many More Future Foreclosures

Congress’ summary:

Access to Affordable Mortgages Act of 2014 – Amends the Truth in Lending Act to exempt from property appraisal requirements certain higher-risk mortgage loans of $250,000 or less if such a loan appears on the balance sheet of the creditor of the loan for at least three years.

Exempts certain individuals required to make such reports from penalties for failure to report any appraisers reasonably suspected of failing to comply with the Uniform Standards of Professional Appraisal Practice, of violating applicable laws, or of otherwise engaging in unethical or unprofessional conduct.

Amends the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to exempt such higher-risk mortgage loans from property appraisal or evaluation standard requirements”

In layman’s terms, this amends the Truth in Lending Act (TILA) in that the bank no longer is obligated to conduct an appraiser on certain lower priced homes; $250,000 or less.  Typically, a mortgage is only given based on the appraised amount; the value of the home at the time it is purchased.  Apparently when banks conduct property appraisals, that seems to unfairly discriminate against some segment of the population trying to buy.  This apparenty “eases compliance burdens on lenders and increases credit access for lower- and middle-income borrowers.” as stated by U.S. Representative Randy Hultgren (IL-14).

If passed, essentially if someone if asked to pay $200,000 for their $50,000 house they can, and the bank has no liability for lending this money to buy the “ripoff” house as they do not have to conduct an appraisal.

This will surely lead to many many more underwater homes and foreclosures in the future.