At the peak of the mortgage foreclosure crisis, Orange County implemented a mediation administrative order applicable to mortgage foreclosures. The mediation program was set up through the Orange County Bar Association – a not for profit organization that is capable of effectively managing a large number of mediation referrals. The program was designed to promote communication, facilitation, encourage problem-solving between the parties in a confidential setting where the parties may openly discuss their needs and interest, procedural flexibility, fairness, and confidentiality.
On April 12, 2018, Chief Judge Frederick J. Lauten signed an Order Amending the Residential Mediation Procedures for Orange County. The amendment now includes all residential lien foreclosures in which the property is a homestead residence and the plaintiff is a homeowner, community, or condominium association. The Residential Mediation Program requires referral to the Orange County Residential Foreclosure Mediation Program (“RFMP”) unless the plaintiff and defendant agree in writing otherwise.
How will this impact your community association? The biggest impact is there will be additional cost and a delay in the foreclosure action. The program requires a community association to remit a non-refundable $100.00 for all homestead properties. If the homeowner agrees to participate in the RFMP program than an additional $150.00 is required to be paid by the community association prior to mediation. The homeowner is also required to pay a $250.00 mediation fee. In addition, the defendant has 40 days after the filing of the complaint to decide whether to participate in mediation. Once the defendant agrees to participate, the mediation is coordinated through the RMFM program which has a total of 100 days for the mediation to take place.
The program also requires multiple forms to be filed and served with the complaint which will also increase costs. The plaintiff is responsible for providing certain homeowner contact information to the RFMP program shortly after the lawsuit is filed. This will require the community association to provide this information to the law firm upon referral of the collection account. For example, the name of all owners, last known address and telephone number must be provided to the RFMP program manager.
The association will also need to designate a representative who will appear at mediation. Mediations are held during business hours according to the RFMP program. The association representative must have full settlement authority to settle at the mediation. We recommend that any delegated authority be made a duly noticed board meeting prior to the mediation, and a written resolution adopted designating such person and authority.
Lastly, there is a monetary penalty against the plaintiff for failure to comply with all requirements set forth in the administrative order. Community associations in Orange County should contact their legal counsel to ensure they are aware of the amended order and their lien foreclosures are in compliance with its requirements.