How Homeowners Can Weaponize Mediation Process

by Neil Garfield

In the 9th Circuit Court in and for Orange County, Florida the following administrative order has been issued:

see 2012-06-03-Amended-Residential-Foreclosure-Mediation-Procedures-Orange-County 

The order requires mediation wherever possible. It is similar to many administrative orders issued throughout the country and its terms closely mirror most individual orders issued by judges in individual cases.

The first thing about this is obvious: Mediation is only possible if the parties (a) appear and (b) have authority to settle the case. If you are contesting standing (and you probably should be) this presents an opportunity because the order states as follows:

  1. Referral to Mediation. This Order constitutes a formal referral to mediation pursuant to the Florida Rules of Civil Procedure in actions involving a foreclosure of a homestead residence. The plaintiff and defendant are deemed to have stipulated to mediation by a mediator assigned by the Program Manager unless pursuant to rule 1.720(f), Florida Rules of Civil Procedure, the plaintiff and defendant file a written stipulation choosing not to participate in the RFMP Program.
  2. Attendance at Mediation. The following persons are required to be physically present at the mediation session: (a) the defendant; (b) the defendant’s counsel of record, if any; (c) the plaintiff’s lawyer; and (d) the plaintiff’s representative with full authority to settle as


designated in the most recently filed Form A. Full authority to settle shall include the ability to negotiate and agree to both retention and disposition options, which shall include but is not limited to: authority to approve loan modifications; consent to defendant refinancing; reduction of principal; short sale; deed-in-lieu of foreclosure; consent to judgment; and consent to other workout options.

However, the plaintiff’s representative may appear at mediation through the use of communication equipment, if plaintiff files and serves at least five (5) days prior to the mediation a notice in the format of Exhibit 5 attached advising that the plaintiff’s representative will be attending through the use of communication equipment and designating the person who has full authority to sign any settlement agreement reached. Plaintiff’s counsel may be designated as the person with full authority to sign the settlement agreement.


So (1) mediation  is ordered and (2) the claimant must designate a person with full authority to settle.

Anyone with experience on this knows that the lawyer for the foreclosure mill shows up with an application for modification. There is no offer or even demand for settlement.

The reason is clear: the lawyer is not authorized to settle and neither is the person who appears on the phone. In fact, one could credibly conclude that the claimant failed to show up.

The foreclosure mill lawyer should be pressed as to the identity of his client and whether he represents, for example, US Bank, or some trust or some “certificate holders.” The lawyer can’t answer because the answer is none of the above. The lawyer represents a servicer who is receiving instructions from an investment bank. The lawyer will give an evasive answer. The homeowner should object and request the mediator note that the appearance of the Plaintiff is in question and unresolved.

And to test the authority of the person on the phone you can ask whether they have authority to settle. Sometimes the surprising answer is “NO!” And you can ask whether they are representing, for example, US Bank, a trust or certificate holders. Like the first question they will either deny representation of any of those possibile claimants or they will try to evade the question. So you ask “How are you authorized to represent either US bank, a trust or certificate holder?” Again you get crickets.

Watch out for the mediator notes and issue requests or instructions to mediator that are within reason. Remember that the mediator’s income is heavily dependent upon payments from the banks for mediation. If they are instrumental in defeating foreclosure they are reducing their income.

The point of all this is a motion for sanctions and in many cases judges are reserving ruling but also ordering sanctions like $1,000 per day against the claimant and claimant’s counsel if they go back to mediation and still fail to comply with the mediation order. The dollar amount is usually stated as a minimum along with the threat of striking the claim as a sanction.

Even if you don’t completely succeed at sanctions, if this is presented properly, it allows you to take control of the narrative to wit: that the claimant is named in words but is unknown, nonexistent with a nonexistent claim. Once you start that narrative the judge is going to pay closer attention to your objections at trial or your arguments against summary judgment or your arguments to compel discovery.

The Bottom Line is stop assuming anything written or said about the claim is true, including the implied representation of a named but unknown and probably nonexistent claimant with no claim despite the appearances or illusions created by appearance of licensed counsel — who are all protected by litigation immunity.

PRACTICE HINT: KEEP AN OPEN MIND AND BE MORE CURIOUS. Resist the impulse to skim documents or pleadings.

  1. For example when you see “US Bank, as trustee” ask yourself what is happening. So US Bank is not the Plaintiff but is being proffered as a representative of a Plaintiff or claimant.
  2. OK, then who is the actual plaintiff or claimant or beneficiary?
  3. Don’t just ask the question. Answer it.
  4. If the proffer is “on behalf of XYZ Trust” then fine, does the trust have a claim? Will the trust receive the proceeds of a distribution of proceeds from a forced sale of the property?
  5. If the proffer is “on behalf of certificate holders” then fine, what certificates?, what holders? and do they have a legal conveyance of an interest in the debt, note and mortgage? Spoiler Alert: Their answer is that this information is proprietary. Really? Then you need to point out to the judge that the action is filed on behalf of unknown claimants without any allegation that such claimants possess an interest in the subject debt, note or mortgage. The homeowner should not be required to defend a claim from an unknown claimant.

If you don’t raise the issue and present it logically and credibly the issue vanishes because the judge is not going to do the work for you. That is not part of a judge’s job description.


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