Foreclosure mediations are a fraud: plaintiffs get paid NOT to settle

Ever wonder why more foreclosure cases don’t settle? After all, in other types of lawsuits, as may as 90% of them settle out of court. Foreclosure cases are nowhere close.

But what about court-ordered mediation? The Florida Supreme Court has ordered most foreclosure cases to mediation, where the parties must sit down and spend time talking about nothing else but how to settle their case. Mediation can be enormously successful in other types of cases—why not foreclosure?

Because, as the Palm Beach Post reports, mediation is a lie when foreclosure plaintiffs get paid not to settle their cases.

“Settlement in these cases is not in the economic interest of the foreclosure law firms or servicers handling the foreclosures,” said Boca Raton foreclosure defense attorney Ron Kaniuk of Ricardo, Wasylik & Kaniuk. “The law firms not only do the foreclosure work, they do the evictions and the bank-owned home sales and the title work, so if they modify a loan, if they come to a settlement and the foreclosure case ends, their work ends.”

Foreclosure mediation, far from the cure-all that the courts want it to be, is be a frustrating, often pointless diversion of resources because only one of the parties has any interest in real settlement talks. What we see most often in foreclosure mediations is that the bank lawyers show up prepared not to offer any actual deals, but to demand that the homeowner provide forest-killing amounts of paperwork. In effect, they are there to demand the borrower apply for a settlement, and they will consider, and often reject, the homeowner’s pleas for mercy.

Real settlement rarely occurs at these mediations. One recent news report reveled that the entire Hillsborough County mediation project has saved a grand total of four homes.

Four.

Real settlement, in our experience, only occurs when the plaintiff has a real incentive to come to the table and make a genuine offer. So far, mediation hasn’t provided that incentive.