A new mandatory mediation program in Northwest Florida may produce a big reduction in the number of foreclosure lawsuits that are filed against homeowners who are facing financial problems.

The mandatory foreclosure mediation was ordered by Judge Kim Skievaski for the First Judicial Circuit Counties of Escambia, Santa Rosa, Okaloosa and Walton in Northwest Florida.

The order, effective April 1, 2009, requires banks and other lenders to send foreclosure cases to mediation before they can actually file a foreclosure lawsuit. The order affects only homeowners who live in their homes and not second homes, investment or commercial property owners. The mediation part of the program will be administered by the Collins Center for Public Policy, a Florida non-profit organization that played a major role in mediating Florida hurricane insurance claims.

Mandatory mediation has two major goals—to help financially beleaguered homeowners and to help reduce the rapidly increasing number of foreclosure court cases.

While banks have teams of legal experts at the ready, homeowners are almost always unrepresented and are often overwhelmed, intimidated and unequipped to deal with the legalities. The Collins Center will hire professional, certified mediators to represent homeowners in the mediation. The service will be free to homeowners and will be paid by fees of $750 on lenders.

As Florida faces extreme budget cutbacks, the court system is faced with declining revenue and escalating case loads. There were more than 385,000 foreclosure filings in Florida in 2008 and the rate continues to climb in 2009, according to RealtyTrac, a national foreclosure tracking company.

The Collins Center says the initial mediation case load is estimated to be 16 foreclosures per day when the program starts. There will be about a dozen “workout options” or resolutions to foreclosures that will be available to the homeowner and lender. Among the possible solutions are a short sale, deed in lieu of foreclosure, rate reduction, loan modification and a mortgage assumption.

At the end of March 2009, there were nearly 700 foreclosured or pre-foreclosure homes listed on the Multiple Listing Service in Escambia and Santa Rosa Counties.