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Foreclosures surge as process slows

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Indiana Lawyer Focus

The lull in foreclosures filings is over for the moment. But that doesn’t necessarily mean the foreclosure process is moving any faster.

Indiana had one of the sharpest increases in foreclosure filings in July, according to RealtyTrac, which said they rose 83 percent compared with the prior month. RealtyTrac, which defines “foreclosure filings” as default notices, scheduled auctions and bank repossessions, compiles the monthly U.S. Foreclosure Market Report that analyzes data from 2,200 counties.

But July’s spike in foreclosures might not be a long-term trend. “One thing I’ve been following is the 90-day delinquency number. There have been a lot of people speculating that there’s a huge bubble about to burst, but the 90-day-plus number has not really grown,” said Tom Dinwiddie, a partner with Wooden & McLaughlin LLP in Indianapolis, who represents the Indiana Bankers Association and the Indiana Mortgage Bankers Association.

Dinwiddie pointed to data from the Mortgage Bankers Association that shows the percentage of Indiana home loans 90 days late or in foreclosure fell to 7.6 percent in the second quarter of 2012 compared with a rate of 8.2 percent a year earlier.

“That’s a very good sign,” he said.

The July rise in the foreclosure filings is due in large part to a lifting of a moratorium on foreclosures that major lenders agreed to prior to a $20 billion settlement in the wake of a “robo-signing” scandal, in which lenders signed contracts with little or no oversight.

“This will be a spike and it’s going to level out a bit, but the big problem we have now is most of the bad, predatory loans have been washed out,” said Notre Dame Law School professor Judith Fox, who runs the Economic Justice Project at the Notre Dame Legal Aid Clinic.

“The people in foreclosure now are the ones who lost their jobs and it’s through no fault of their own,” she said. “We’re not going to recover from this for a very, very long time.”

That’s a trend Eric Redman, senior partner at Redman Ludwig P.C. in Indianapolis also is seeing, with homeowners often resorting to bankruptcy due to job loss, reduction in income, medical bills or other factors. It’s not like the first foreclosure wave during the financial meltdown, where Redman said credit card debt was a big factor.

“We have seen an increase in people that need Chapter 13 help for mortgages in the last couple of months,” Redman said. “A lot of people make the evaluation they need to file Chapter 7 and give up the house – they’re so upside down it’s not worth continuing to pay.”

Processes that have been put in place to safeguard homeowners who fall behind have had mixed success.

Merrillville attorney Andrew Kraemer has represented both borrowers and a local lender in foreclosure matters. He said that since settlement conferences in foreclosure proceedings have become more common, they have produced results.

“It has worked here in Lake County,” Kraemer said. “It seems to be a very nice means for getting the sides together and talking, at least. … We can have disagreements, but I’ve found them to be fairly civil.

“I think at the end of the day the reason settlement hearings work is not solely because they get the parties together,” he said. “As long as it’s economically feasible for both sides, it’s going to work.”

Dinwiddie said the bankers’ organizations were key to legislation that created settlement conferences and efforts to improve counseling.

“From the lenders’ standpoint, they didn’t need the foreclosure counseling to want to resolve cases,” he said. “The problem we had was borrowers would not talk to the lenders. They were either afraid or embarrassed or resisted the loss-mitigation efforts the lenders had.”

Redman said clients he saw didn’t gain much from initial efforts. “Most people that were trying to do loan modifications were extremely frustrated with the process. They’d submit paperwork and many times it’d get lost, or they’d get sued anyway.”

Urging greater use of settlement conferences was among the best practices recommended to the state’s judges by the Indiana Supreme Court Mortgage Task Force on which Fox served. “There’s been a little more cooperation,” she said. “There’s just such a backlog.”

Information on the inventory of foreclosed properties that banks hold is difficult to find, Fox said. Forbes reported in June that the “shadow inventory” of property repossessed by banks nationally stands at 1.5 million homes worth about $246 billion.

Dinwiddie said inventory is declining in Indiana, and filings should eventually decline because the 90-day delinquency figure hasn’t increased. “I would say it will get cleared up in Indiana as soon as the unemployment numbers improve,” he said.

Meanwhile, the amount of time foreclosures are taking to process remains long, particularly in states such as Indiana where a judicial process is involved.

The average foreclosure in Indiana took 443 days in the fourth quarter of 2011, according to RealtyTrac. That compares with an average of all states of 348 days. New York and Florida led the nation with average process periods of 964 days and 806 days, respectively. Texas was quickest at 90 days, RealtyTrac reported.

The clinic Fox runs at Notre Dame assists as many as 100 low- to moderate-income homeowners facing foreclosure a year, she said, noting it’s just a fraction of the need. Many attorneys are reluctant to offer pro bono service in such a complex area of law, Fox explained. “The law seems to change every day.”

Anecdotally, Fox said she sees signs that lenders are in no rush to take back more property.

“Can I prove it? Probably not, but depending on where the client’s home is, and the neighborhood, (lenders are) not moving at all,” she said. “That’s the shadow of ‘the shadow.’”

Fox said some clients stay in their home long after a sheriff’s sale simply because no one knows they didn’t leave. In one case, she said a client lived in a home for six years before being evicted.

On the other hand, she’s also seen some lenders forgo foreclosure actions and instead file a collection action against the buyer. “Just giving a house back doesn’t always end people’s obligation. People don’t understand they still owe the money,” Fox said.

Some Hoosiers have received relief from the $20 billion settlement agreed to by five of the nation’s top mortgage lenders, those associated with Bank of America, Chase, Citi, GMAC and Wells Fargo.

According a report from the Office of Mortgage Settlement Oversight, 990 homeowners in Indiana to date have received mortgage relief under the settlement totaling $34.2 million, with an average of $34,932 per consumer.• foreclosure

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  1. Am I the only one who sees that the City is essentially giving away the MSA site AND giving millions to build new buildings on the site when this site would be the perfect place for the Justice Complex? Across from City-County, check; keeping it centrally located, check, etc. It's my understanding that the GM site must be purchased by the City from Motors Liquidation Company. STOP WASTING WHAT WE ALREADY HAVE AND OUR TAX DOLLARS! The Ballard Administration has not been known for it's common sense...never voted for him and never will!

  2. This guy sounds like the classic molester/manipulator.

  3. Louis D. Brandeis was born in 1856. At 9 years of age it would have been 1865. The Brandeis family did not own slaves. My source Louis D. Brandeis: A Life, by Melvin L. Urofsky.

  4. My name is Matthew Lucas Major, I recently went through a jury trial in Bloomington , In. It was the week of Feb 19-21. Although I have been incarcerated since August 5, 2014. The reason I 'am writing to you sir is on the 21 of February the jury came in with a very excessive and wrongful verdict of guilty on 6 child molesting charges against my daughter who was 9 at the time I was accused. I also had 2 other Felonies one of Intimidation and 1 of Sexual Vicarious Gratification. Judge Marc Kellam on the second day of trial gave me a not guilty on those 2 felonies. The jury was sent out during that time and when brought back Judge Kellam told them to not concern themselves with the 2 Felonies that he ruled on them. They were told to not let evidence they had already heard influence there verdicts. I never in my life touched any child sexually and definitely not with my own daughter. When I was arrested Detective Shawn Karr told me I would be convicted guilty just on my daughters word even without evidence. That's just what happened. my public defender did me so wrong he never once proved to the court and jury all the lies the child told, and Jeremy Noel my public defender could of proven the lies easily. The stories in Serenity's depositions and Forensic interview changed and were not consistent as Prosecutor Darcie Fawcett claimed they were. Yet my attorney never mentioned that. The facts that the child accused me of full penetration in her vagina and rectum was proven lies. Doctor Roberta Hibbard of Riley hospital in Indianapolis confirmed Serenity's hymen intact, no scars, no tearing, no signs of rape to her. Yet my attorney didn't use that knowledge . the DNA was all in my favor. I tell you I will spend my entire life in prison going through rape and beatings etc. even Judge Kellam abused his authority by telling the jurors to listen and believe what the prosecutors side in evidence like my daughters testimony. In one interview with the detectives my daughter got flustered with her mom and said on camera " I'm saying what you told me to mom"!! Yet Mr. Noel said nor did anything to even resemble a defense attorney. Judge Kellam allowed edited version of a taped conversation between the child and her mother. Also Judge Kellam allowed the Prosecutor too bring in to my case a knife found under my seat, the knife wasn't part of my case. She was allowed by my attorney and the judge to put a huge picture of it on the screen and huge picture of my naked privates in a full courtroom and open court. Ms. Fawcett says to jury see how easy Mr. Major could reach the knife and cut his Childs throat. Even though I had no weapons charge against these cases. This gave the jurors prejudice thought against me thinking I threatened her with that knife and how scared she would of been knowing i could get it and kill her. On my sentencing court March 19, 2014 my public defender told Judge Kellam he wish to resign from being my attorney and wished for the court to give me outside council to file a error to trial or appeal. We were denied. Now after openly knowing my public defender don't want to represent me he has to. Well when as parents we make our kids clean a room when they really don't wish to, well the child will but don't mean she will do a good job, that's where I'm at with Mr. Noel. please dont ignore mine and my families pleas for your help . we have all the legal proof you could need to prove Im innocent. Please dont make my spend years in prison innocent when you can fix this wrong. Im not saying Im a perfect man or that I was a perfect dad to my 2 children none of us are. Ive made some bad choices in life and I paid for them. But I didnt ever touch or rape my daughter . I love my children with all my heart. And now through needing attention and a ex-wife who told my granny several times she wish she could put me in prison to get me out of their lives. Well my ex finally accomplished her goal. Sad part is she is destroying our daughter with all this horrific lies and things she taught my daughter to say. My daughter will need therapist to ever hope for a chance of a normal life after what she had done to her by her mom and their side of the family. My daughter told everyone even on stand she had a dream months before i supposedly molested her in this dream I was molesting her and when I finally did it matched her dream perfectly. She admitted to watching movies about little girls being molested and watching U-Tube videos about child molesting all before it happened supposedly to her. Doesn't that sound very unusual that a non molested 9 yr old would need to know so much about being molested? The only reason I could think a 9 year old would need so much information is to be prepared to know what to say and be able to say how it felt what took place etc.. So when questioned by authorities she would be prepared. And there again sir if a parent is pre grooming a 9 year old child she would need intimate details . Like telling her daughter about a couple moles on my private area. The child admitted to sneaking my cell and looking many many times at nudes of me and my girlfriend even one where my penis was entering my girlfriends vagina. In that picture my moles are obvious. Yet when prosecutor showed everyone in court my privates and pictures of the moles she said the only way the child would know about them is if she saw them for herself. My attorney once again said nothing about the pictures my child saw. Or could a ex-wife be able to describe my moles to help her case against getting rid of me? I beg you help me. This is my very existence. Ive lost everything , a good job, a wonderful girlfriend, my freedom, but worse thing Ive lost is my children. They were my reason to get up every morning and strive to be better. The wonderful bond I had with my Serenity is gone. After this I would be afraid to even hug her for fear of what next can they do to me. I'm not afraid to tell you I sit here in this cell and try to hold back my tears. Everyone knows you cant show weakness in prison. My life has already been threatened here at Wabash Valley Prison. After only 3 days of arrival. I was tricked into signing a waiver now Im in G Block General Population with 6 child molesting felony charges. Mrs. Hart as a 18 year old I almost died hooked to machines in hospital almost 1 month and now I know that fear was childish compared to this . I cant help but put emotions in this, after all Mrs. Hart Im human and God help Me I never been more afraid in my life. I didnt hurt my little girl I didnt touch her sexually. As much as it shreds me and fills my mind what Im facing I worry more about my mom and granny because of their great love for me mam they are suffering so deeply. I aint done this things but my loved ones suffering right along beside me and If you take my case you will be in essence freeing them also. I sent momma this letter and asked her to email it to you. I'm scared I have been done so unjustly by our legal system and I need you to fix this and give me freedom. I ask you please don't just ignore my pleas. Here in America its nice to be able to trust our legal justice system, well they destroyed my and my loved ones trust in our justice system . And I'm trusting in You !!! My entire family is suffering this nightmare with me. My 77 year old granny had a stroke and isn't doing so well. My single mother that raised 3 kids alone is dying from Lupus and since my arrest has stayed so sick and weary. Our lives torn to peices by a government I was taught I could trust in. my momma has tried so many innocent project and wrongfully accused and cant get anywhere. please please help me. A quote from the late Nelson Mandela: To be free is not merely to cast off ones chains, But to live in a way that respects and enhances The Freedom Of Others. I have Faith in you and your clinic to cast my chains off and give me freedom I do deserve as a wrongfully accused Man, son, brother, father, friend. Matthew Major DOC# 246179 Cause # : 53c02-1308-FA-000779 God Bless you. Please contact me with your decision so I know you made a life changing decision for me , just please at least write me so I know you care enough about your citizens to respond to cries for your help. You can speak openly with my mother Charlotte Spain (828) 476-0406: 71 Lakeview Dr. Canton, NC 28716 Thank You Matthew Major I know yall get thousands of request and inmates claiming innocence, and each person who are innocent deserve to have organizations like yours willing to fight for them and I give yall so much Thanks and I thank God everyday yall are out there caring enough to help free the innocents. Since discovering firsthand how easily lives and families can be destroyed by Poor Defense attorneys not doing their job . And Prosecutors allowed to do as they please in court

  5. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

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