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Like the tail on a comet, home foreclosures continue to pour off into the slipstream left by the real estate meltdown. This summer, fully 10.5% of the 3.5 million mortgage loans being serviced in Florida were in some stage of the foreclosure process, according to a report prepared by a Florida Supreme Court task force, which called the figures “horrifying.” The state ranked second in the nation in the number of properties with foreclosure filings, with about one in every 140 homes. In August, initial notices of default increased by 12% over July, and scheduled auctions rose by 13%, according to RealtyTrac.

In 2006, the 11th Judicial Circuit in Miami-Dade County had seen about 3,500 foreclosure cases filed as of June. As of June this year, nearly 35,000 had been filed. About 75% of the circuit’s incoming caseload is now foreclosure cases, says 11th Circuit Administrative Judge Jennifer Bailey, who also chaired the task force. Whereas the foreclosures that flooded in two years ago stemmed from loan dynamics — interest rate resets and balloon notes coming due, for example — foreclosures these days are coming because homeowners have lost jobs or had their hours cut. Bailey says her circuit is so backlogged that it takes seven months to schedule a courthouse-steps sale of a property after her court has issued a final foreclosure order. “There is no sign of anything abating in Florida or anything stopping,” Bailey says.

Whom to blame for this is past discussion. Let’s just stipulate that both borrowers and lenders were co-celebrants in the credit orgy that defined the real estate boom. In any case, foreclosure is an ugly process in which neither borrower nor lender wins. Most homeowners would prefer not to get kicked to the curb, even when their homes are worth less than they paid for them. For lenders, foreclosure cases are time-consuming and expensive: Foreclosure filing fees alone can be $1,900. Most lenders simply don’t want to end up taking back homes they have to maintain and then resell at a big loss. Meanwhile, the masses of foreclosures tear at a community’s fabric, often spinning off crime and other problems related to abandoned properties and declining home values.

One of the few bright spots in this otherwise grim picture is some good work being coordinated by the Collins Center for Public Policy. (It’s a tribute to the late Gov. LeRoy Collins that his legacy includes two first-rate, independent public policy groups: The LeRoy Collins Institute, a public policy shaper with a research orientation, is affiliated with Florida State University. The Collins Center, which has offices in Tallahassee, Sarasota and Miami, tends toward a slightly more activist bent in its projects.)

The Collins Center stepped up to the plate after the last legislative session, when lawmakers considered creating a mediation program that could help lenders and borrowers negotiate a way to keep people in their homes and keep payments flowing to lenders. When the Legislature produced neither funding nor legislation, the Collins Center on its own began approaching circuit court administrators about introducing mediation into the foreclosure process. The center had coordinated a large-scale mediation effort in 2004-05 when hurricanes produced a logjam of disputes between homeowners and insurance adjusters.

So far, the center is working with three circuit court districts that now require mediation to be offered as a part of foreclosure cases involving residential, homestead properties. Those three districts encompass Miami-Dade, Martin, St. Lucie, Okeechobee and Indian River counties in south Florida, along with Escambia, Santa Rosa, Okaloosa and Walton in northwest Florida. Those districts require lenders, as they file foreclosure suits in local courts, to provide the Collins Center with the borrower’s contact information. The center then reaches out to the borrower to see if he’s interested in trying to work out his loan through mediation, says Ned Pope, director of the Collins Center’s mediation program. About a third of the borrowers respond.

The center arranges a meeting between the homeowner and a local certified financial counselor to determine how much financial breathing room the homeowner has. Then the center arranges a session at which a locally based, court-certified mediator conducts a negotiation between the homeowner and the lender. The center’s efforts and the circuit court’s backing address a big problem in working out loans, Bailey says — establishing effective communication between loan servicers and borrowers.

About a third of the time, Pope says, the mediation reaches an impasse, and the foreclosure proceeds. In nearly 70% of the cases, however, the homeowner and lender are able to reach agreement on a modification of the loan that fits the homeowners’ financial circumstances. The lender, of course, avoids having to take back the house and ends up with a performing loan.

The mediation program relieves the court of the administrative burden of handling the cases, saving time and money. It uses local counselors and mediators, not Collins Center staff. The cost is minimal — $750, paid upfront by the lender, most of which goes to the financial counselor and the mediator. Perhaps best of all, the mediation effort doesn’t involve creating a government program to deal with a problem whose dimensions, over time, should return to more typical levels.

This month the Florida Supreme Court will decide whether to make mediation a mandatory part of foreclosure cases in Florida’s other judicial circuits. Bailey’s task force has recommended the Collins Center’s program as the model. Both she and the task force “can’t see how this isn’t cost-effective” for lenders, she says.

The other judicial districts in Florida would be wise to adopt mediation as part of the foreclosure process. Bailey, Pope and others also believe that lenders should introduce mediation after a loan has become delinquent but before they file a foreclosure lawsuit. “Even if we only settled 10 out of 100, it would save court fees and attorneys fees and would save us work as well,” says Pope.

In the meantime, the center’s program isn’t costing taxpayers a dime. And by the time this appears in print, more than 1,000 Floridians will still be in their homes — and paying their mortgages — thanks to the program. Given the grim nature of the foreclosure statistics, any effort that’s successful at making the best of a bad situation is well worth noting.