STRENGTH – Governor Wanda Vázquez Garced signed Senate Bill 1325 to amend the Law for Compulsory Mediation and Preservation of your Home in Mortgage Foreclosure Proceedings of a Main Home in order to improve the mediation law to achieve a process more agile and precise, at a time when faced with the COVID-19 situation, many people could benefit from these processes in order to retain their homes.
“We want to prevent people from losing their roof, their main home and that is why the law was created to be able to provide mediation alternatives so that this does not happen. As time passes and given the circumstances in which we have lived, it is necessary to amend and temper it so that it meets the needs of all parties, and that is what is intended with this measure, ”the governor said in a written communication about the amendment which was supported by Community Legal Services, the Bar Association, Puerto Rico Legal Services, the Foreclosure Prevention Clinic of the University of Puerto Rico School of Law, among others.
This measure arose after a summit with representatives of debtors and mortgage creditors, as well as mediators, who presented opinions in order to improve the mediation law to achieve a more agile and precise process.
It establishes clear rules on the mediation process for both parties regarding the term to produce documents, allowing the mediator to inform the court if one of the parties obstructs the process, allows voluntary resignation in the event that the person in effect what wants is to surrender the property, and requires that the one representing the creditor have authority to negotiate similar to how it is already in other jurisdictions.
Compulsory mediation is a procedure designed to help the mortgage debtor and provide him with legal tools to avoid foreclosure of his property, reaching agreements with the creditor.
“That said, we understand that there are certain particular cases where that same debtor wants to dispose of the property and can decide under certain circumstances that he does not want to enter the mediation process. There are cases, for example, where the debtor has agreed to a voluntary surrender, but cannot consummate it due to subsequent liens on the mortgage. However, on the other hand, we cannot lose perspective that, according to information from the Bureau of Alternative Methods of the Office of Administration of the Courts, the bulk of the mortgage debtors do not have legal representation when they go to these processes. A person who is going to waive their right to enter this type of mediation must understand the short, medium and long term effects. It would then be necessary to guarantee that the person who resigned does so freely and voluntarily, that is to say that the resignation was informed, not conditioned or coerced. After listening to all the proposals, this measure allows it in the cases of disposition of the home, where the mortgage debtor is not interested in the retention of said home, ”the measure reads.
On the other hand, although the mediation process is confidential, this measure specifically allows the mediator to inform the court if one of the parties obstructs the process.
The author of the measure, Senator Carmelo Ríos, highlighted: “I am grateful to Governor Vázquez Garced for giving way to this measure that is consistent with our mission to help thousands of families who are struggling to preserve their properties. This legislation will promote an agile and transparent compulsory mediation, without undermining the ordinary processes of banking institutions. It is my commitment to continue promoting measures that help mitigate the mortgage crisis on the island ”.
The director of the Mortgage Foreclosure Prevention Clinic of the University of Puerto Rico Law School, Ricardo Ramos González, indicated that with this measure “the obligation of creditors to act in good faith is ratified, emphasizing the Jurisdictional nature of the mediation process, regardless of whether the claim has been answered, that is, a court before declaring a debtor in default must summon mediation. In addition, it adds that the creditor has to send people with decision-making capacity to the negotiations, and it helps those debtors who are members of a post-community partnership or a succession ”.