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Court programs, economy among focuses of foreclosure conference

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When it comes to the problem of mortgage foreclosures in Indiana, there appears to be no end in sight, at least not yet. The Hoosier state is no longer a national leader in foreclosures, but that is only because numbers are on the rise in other states.

That’s the bad news.
 

greg zoeller Zoeller

The good news is that many people are working to help homeowners, neighborhoods, and municipalities deal with the issue – the topic of discussion at the Civil Justice Summit at the University of Notre Dame Nov. 16. The summit was organized by the Indiana Attorney General’s Office and featured comments from AG Greg Zoeller and assistant AG Abby Kuzma, who leads the Attorney General Office’s Consumer Protection Division.

One program that has been helping Indiana homeowners since March is the Mortgage Foreclosure Trial Court Assistance Project.


kuzma-abigail-mug Kuzma

The counties involved in this program, listed in the order they joined, are Allen, Marion, St. Joseph, Monroe, Lake, Madison, Clark, Hamilton, Vanderburgh, Hendricks, and Tippecanoe counties. These counties were on board by November 2010, and Elkhart, Delaware, Parke, Bartholomew, and LaPorte counties will be added to the list by January.

While 16 out of 92 counties may seem like a small number, said Elizabeth Daulton, project manager of the MFTCAP, those counties make up about two-thirds of all foreclosure filings in Indiana. She added Marion and Lake counties combined make up about one-third of state filings.

For all courts with pilot programs, the process is similar. All borrowers in foreclosure filings receive notice in the mail that they are entitled to a settlement conference with their lenders per a statute that went into effect July 1, 2009.

Borrowers who have filings in courts that aren’t part of the pilot program can still request a settlement conference, but even with the state statute, the courts were receiving very few requests.

Of the 1,491 orders for phone conferences that were mailed in Allen, Marion, St. Joseph and Monroe counties between March 1 and Nov. 12, 737 phone conferences took place, 681 borrowers from those conferences were found to be eligible for settlement conference, 623 conferences were requested, and 541 conferences had taken place so far.


daulton-elizabeth-mug Daulton

Of the conferences that took place, about 40 percent resulted in a stay-in-home workout, about 9 percent resulted in other workouts, such as a short sale, and 30 percent resulted in foreclosure. The rest needed follow up from a facilitator, which was likely because the borrower or lender needed to supply more information than was available at the settlement conference.

If all borrowers in Indiana were part of an opt-out program like this one and numbers for foreclosure filings similar to those above were applied, Daulton estimated 18,406 borrowers would request a settlement conference and that 9,203 homes would be saved.

Foreclosure expert and summit participant Alan White of Valparaiso University School of Law said these numbers meant the outreach was effective and worthwhile. He added that while a similar program in Staten Island, N.Y., had about an 80 percent rate of settlement conferences, about half of those conferences resulted in a workout.

One of the common factors of the conferences in the pilot program that ended in a stay-in-home workout was that the borrower had some kind of income, Daulton said. They might have less income than before the foreclosure proceedings, but they still had something that was workable.

“I want to compliment their work,” Kuzma said. “It is making a huge difference.” She added that up to 97 percent of borrowers were unrepresented in mortgage foreclosures, which makes the job of the facilitator at settlement conferences that much more important.

Following the discussion of the MFTCAP, White explained that the country is still at the peak of the foreclosure crisis, and until the numbers go down, the economy cannot recover. He added that even if no more foreclosures were filed, it could take five to seven years for the housing market to recover.

He also explained that there is currently a 12-month housing inventory in the U.S., but with the number of homes that banks are keeping off the market, it is possible there is actually up to a 24-month housing inventory.

It is more likely for smaller, local banks to make modifications to mortgages, he said. However about 60 percent of mortgages are owned by the larger banks. If lenders are willing to come to the table and can make a modification to keep a borrower in his or her home, it’s a better deal for homeowners and investors.

It’s also a better deal for taxpayers, said Judith Fox, who spoke about vacant properties. Fox serves as a facilitator in St. Joseph County and also leads the legal clinic at Notre Dame Law School.

The reality, she said, is that there is almost $5.5 million in unpaid taxes in Indiana because of vacant bank-owned properties. This does not include the cost to a city of demolishing vacant buildings that have fallen into disrepair.

However, sometimes that cost can revert to the homeowner, who may have thought she no longer had a responsibility for the home.

In one example, a client’s home had been foreclosed on and she had moved out. Without her knowledge, the bank canceled the sheriff’s sale. The house sat vacant for a year and fell into disrepair. The home was still listed in the owner’s name, and she received a notice that the home was in violation of various codes and that she was responsible for the fines.

Fox said at the code enforcement hearing, she learned from the code enforcer that this was a fairly common occurrence.

Another case involved a borrower who moved out of her home because it was going to be foreclosed on as part of her bankruptcy proceedings. She wasn’t told the sheriff’s sale was canceled, and the home was vacant for two years. When another bank took over the mortgage, the new bank filed for foreclosure against the homeowner. The second bank couldn’t produce the note to prove it owned the mortgage, so the case was dismissed.

In a third case, Fox learned that refinance papers were robo-signed. In other words, they were forged to look like someone else signed them. The clinic couldn’t afford to do a deposition, but they were able to get an affidavit from the person whose name was signed to the paperwork. That was in 2007, Fox said.

Fox said she would like to see either local ordinances or a state statute that would require notice to homeowners that they can stay in their homes until the sheriff sale occurs. That is probably in the homeowner’s best interest, she said, to avoid vandalism. She added if sheriff sales are canceled, someone should notify the borrower.

To wrap up the conference, U.S. Trustee Nancy J. Gargula and Gabrielle Owens, deputy director of the AG’s Licensing Enforcement & Homeowner Protection Unit, discussed common fraud.

A common threat involves agencies that file bankruptcy on the borrower’s behalf, then collect the checks but don’t make payments toward the borrower’s debt. Bankruptcy stops collections efforts, and there’s an automatic stay on foreclosures, sheriff’s sales, and lawsuits, so the borrower has a false sense of security that everything is OK.

There are also a number of schemes involving flipping, where fraudsters tell borrowers they’re investing in properties, but the borrower overpays and the fraudsters collect the difference; and reverse mortgages, where the borrower gives power of attorney to the fraudster, who then receives a lump sum payment but does not give the borrower his fair share.

A newer scheme involves California homes facing foreclosures. In that case, non-California residents who have filed for bankruptcy are named as 1 percent owners of the California homes without the knowledge of the person who has filed for bankruptcy. Whenever there’s a bankruptcy on a homeowner, it stays the foreclosure, which is the reason for this scheme.

While the conference highlighted a number of issues regarding foreclosures in Indiana, the underlying theme seemed to be how to help people and what to look out for in the future.•

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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