Government programs have been created to assist distressed homeowners, but at little over month after the Florida Supreme Court ordered required mediation on all homesteaded foreclosures, it remains unclear how much help the latest move offers South Floridians.
The Dec. 28 court decision sounded like a measure of real relief, but for homeowners seeking short sales, it hasn’t made much of an impact, said Fort Lauderdale real estate attorney and foreclosure mediator Shari Olefson. Still, she thinks mediation could start to help distressed homeowners, including those who want a short sale.
In concert with some key federal programs, Olefson is optimistic that a once intractable quagmire of regional mortgage woes could improve. In the alphabet soup of a crisis, she points to a pair of federal programs, Home Affordable Foreclosure Alternatives Program and the Home Owner Affordable Modification Program, which could break up the logjam of missed payments and foreclosure proceedings that have jammed courts throughout the state.
The new Home Affordable Foreclosure Alternatives Program takes effect April 5. The federal program will help some distressed homeowners avoid foreclosure by completing a short sale or a deed-in-lieu of foreclosure on a loan eligible for modification under HAMP. It is a part of the Obama administration’s Financial Stability Plan, which includes the $75 billion Making Home Affordable program. Its success has been limited.
Olefson points out that limits on can qualify for HAMP and HAFA programs mean only a small number of people will actually see real changes in their payments.
“The programs are not for people who just want their home loan lowered, and it’s not for those who can’t realistically stay in their home,” she says. “Eighty million need help. Originally, three to five million homeowners were to be served for modifications and another 4 million with refinance [under the Home Affordable Refinance Program]. By Dec. 1, 2009, one million applications were processed. That’s a big difference — one out of 10.”
But mediation could give both homeowners and their lenders an alternative to the gridlock and brinkmanship that has stalled so many South Florida short sale transactions.
“Homeowners complain that they can’t get someone from the bank on the phone,” she said. “But everyone is calling the banks, even those people who in no way will be able to keep their homes. And, bottom line, the mediation program is designed to do anything to resolve foreclosure.”
Deborah Baker, an attorney with ARC Mediation in Jupiter, agrees.
“It brings the parties to the table and provides a direct line of communication, which has typically not existed in the past,” she said. “The parties can more easily exchange information, determine what actions each party needs to take in order to process and complete a short sale, and provide each other with contact information. Further, the parties can discuss how the deficiency will be handled.”
Mediation might be good news for brokers, too.
“If the banks send somebody with authority and knowledge, it would help,” acknowledged owner broker Douglas Rill of Century 21 America’s Choice in West Palm Beach.
Katerina Gasset, co-owner of International Properties and Investments in Wellington who specializes in short sales, is hopeful about all the programs.
“It’s better for homeowners to be in communication with the banks,” she said. “Agents will be able to do a lot more short sales, and homeowners won’t have a foreclosure on their records.”
Olefson, the foreclosure mediator, said that due diligence is still vital to a successful mediation.
“If you have an interested buyer, choose a Florida Supreme Court civil court certified mediator who is a real estate attorney and do your own mediation. I think the banks will agree to this,” she said.
Sheila Myers, a certified short sale professional and foreclosure specialist from Freewheeler Realty in Islamorada, remains skeptical.
“One of my clients presented the short sale contract at the mediation,” she said. “The bank’s representative made a call to the bank’s attorney and confirmed the short sale. Soon after we got our approval letter, and we had been working on this for a good year. But that has happened only once.
“I wish I could be more hopeful,” she said. “But it all depends on whether the banks send someone who can actually make a decision. In other cases I’ve seen, they didn’t.”