MANATEE COUNTY, Fla. – May 9, 2011 – When Tracy went into the foreclosure mediation session last month, she hoped the bank would consider reducing her mortgage rate instead of taking her Palmetto home.

Instead, the bank demanded that she pay off the entire loan amount of more than $50,000. When Tracy said she couldn’t afford that, the bank offered to pay her $1,000 – for a rental truck if she moved out within 60 days.

“I broke down and cried,” said Tracy, not her real name. “I was so shocked, I felt like I was having a heart attack.”

Her experience illustrates one reason why Florida’s foreclosure mediation program has been so far ineffective, experts say.

And other flaws in the program – the voluntary nature of mediation, homeowner ignorance or unwillingness to participate and hardball negotiating tactics by banks – likely means negotiations will fail to help many borrowers, they say.

“The mediation process is what it is: an opportunity to sit down and talk,” said Dawn Bates-Buchanan, a Bradenton attorney who has attended more than 25 mediation sessions as a mediator and homeowner adviser. “It’s all voluntary. Nobody’s forced to do anything. If nobody has to do anything, usually nothing gets done.”

Low success rate

The Florida Supreme Court in late 2009 required mediation in new foreclosure cases involving homesteaded properties. Its aims were to aid borrowers and reduce a foreclosure backlog of more than 462,000 cases.

While it and other efforts have helped reduce the backlog by a third, the program has fallen short of meeting the first goal, state figures show.

Nearly 58,000 cases statewide have been referred to mediation in the six months since the program began in March 2010, according to a recent report from the Office of the State Courts Administrator. Of those, just 2,162 cases – or less than 4 percent – had resulted in an agreement between the bank and borrower by May 1 of this year.

The 12th Judicial Circuit, which consists of Manatee, Sarasota and DeSoto counties, had a higher success rate: 71 settlements out of 1,691 cases, or 4.2 percent.

That’s not good enough, the circuit’s top judge said.

“I’m not pleased with the results we’ve seen so far,” said Chief Judge Lee Haworth, who helped create the mediation program as a member of a Supreme Court task force. “I don’t think anybody is.”

Where are borrowers?

A big reason why there haven’t been more settlements: few borrowers coming to the bargaining table or even knowing the table is there.

Those administering the program have been unable to reach the borrower in 3 out of 5 cases, state figures show. In the 12th Circuit, the contact rate is even less: 35 percent.

That might be because the borrower’s phone has been disconnected, the borrower has moved without leaving a forwarding address or is overwhelmed by or ignoring foreclosure-related mail and phone calls.

Copyright © 2011 The Bradenton Herald, Fla., Duane Marsteller. Distributed by McClatchy-Tribune Information Services.