By Vincent B. Flor, Esq.

In response to the enormous volume of mortgage foreclosure filings pouring into the Miami-Dade court system, Chief Judge Joseph P. Farina of the 11th Circuit entered an administrative order in April establishing the 11th Circuit Homestead Access Mediation Program, also known as “CHAMP.” Effective May 1, 2009, the order requires mortgage lenders and owners of homestead property to attempt mediation as soon as a foreclosure case is filed.

The Collins Center for Public Policy has been appointed as the organization that coordinates the mediation, financial counseling and other services within the program. The $750 fee for participation is initially borne by the mortgage lender, and the order requires that a case be processed by the program within a period of 120 days – which will further delay existing foreclosures.

There is language in the order which gives community associations some cause for concern. Specifically, a provision purports to make the order apply to “all residential foreclosure actions involving homestead properties.” Arguably, such a mandate could include community association lien foreclosure cases. However, the vast majority of the order uses the terms “mortgage foreclosure actions,” “Plaintiffs/Lenders,” “Defendants/Borrowers,” and “mortgage and note.” Such language strongly suggests that the order's mediation agenda was intended for banks and not community associations.

The firm recently attended the April 23, 2009, press conference at which Judge Jennifer Bailey publicly unveiled the CHAMP Program and addressed concerns about its potential implications for community associations. In response to our query, Judge Bailey welcomed us to submit a written statement of our position on behalf of associations. We wrote to Judge Bailey stating our opinion that the order did not apply to associations, and that in any event the order would be an unreasonable burden for associations by forcing them to pay a $750 fee for each foreclosure case they filed and submit to a complicated mediation process. In response, we have received a verbal confirmation from Judge Bailey clarifying that the order does not apply to community association lien foreclosures. However, the issue continues to be unresolved due to the entry of a further administrative order which provides that community associations are exempt from having to mediate in actions filed prior to May 1, 2009. As a result, it remains unclear how the Court will ultimately treat community association foreclosure actions filed after May 1, 2009.

Of great concern, the order still has implications for community associations even if it does not force them to participate in the mediation program. Although the order calls for the mediation process to be concluded within 120 days, it remains to be seen whether that deadline can be realistically met. The number of cases to be mediated will be daunting, and it is unclear whether the Collins Center for Public Policy has sufficient infrastructure to timely process all the cases referred to it. Furthermore, whether the cases are managed on a timely basis or not, at least 120 days have been added on to the life of mortgage foreclosure actions. That represents 120 more days that a community will likely have to endure unpaid assessments while it waits for the bank's case to conclude and produce a new, paying owner.

On the other hand, the order may have a silver lining. If mediation is in fact successful in working out realistic, feasible mortgage loan modifications, perhaps that will put homeowners in a better position to pay the rest of their bills, including their assessments obligation.

On balance, it is clear that the CHAMP order was entered by our local judiciary with only the best of intentions and out of a desire to manage an increasingly desperate situation. However, it fails to consider the challenges faced by all of the parties affected by the present economic crisis, especially those of community associations. We can only hope that the program is true to its own word by bringing cases to a conclusion quickly and efficiently, and improving homeowners' financial position.