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Group criticizes foreclosure mediation programs

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A report released today by the National Consumer Law Center examining foreclosure mediation programs believes states, including Indiana, need to make substantial changes before the programs can be effective.

In "State and Local Foreclosure Mediation Programs: Can They Save Homes?" the NCLC looked at 25 programs in 14 states, all which started in 2008 or 2009. Senate Enrolled Act 492, which took effect July 1, requires lenders to inform mortgage holders about their right to participate in a settlement conference if the lender files an action to foreclose and if the borrower meets certain criteria, such as assuring that the home is the borrower's primary residence.

According to the report, court-supervised mediation programs will be more beneficial to homeowners if the lender is required to give the homeowner a document showing its affordable loan calculation; the lender produces specified documents, such as loan originating documents; the lender complies with all mediation obligations in good faith and establishes proof of the mortgage holder's standing and status as the real party in interest; and the lender is required to document its considered specific alternatives to foreclosure.

SEA 492, now Indiana Code Section 32-30-10.5, requires lenders to give homeowners notice they have 30 days after the notice is served to schedule the settlement conference; a conference must be conducted no later than 60 days after the date of notice. The act requires the lender to provide certain documents to engage in good faith negotiations.

According to the report, there are several flaws in Indiana's newly implemented settlement mediation program. It lacks formal systems for tracking most basic data on outcomes of mediations or conferences. The program requires homeowners to opt-in within 30 days and the NCLC believes this may exclude some homeowners who don't understand the opt-in procedures. Indiana's program also doesn't involve direct court supervision.

The law center would like to see direct court supervision over the enforcement of lender obligations to mediate. It also wants states to make participation by homeowners automatic; allow mediation requests to be made up until the time of the foreclosure sale; stay all proceedings until it's determined the lender complied in good faith with program obligations; provide funding for outreach, housing counselors, and qualified counsel for homeowners; prohibit lenders from shifting its attorneys' fees and costs to the homeowner; and require junior lien holders to be notified and allowed to participate in the mediation process.

"Under most of the existing foreclosure mediation programs, servicers have all the discretion and homeowners have little or no power," study author and NCLC staff attorney Geoffrey Walsh said in a statement. "If the programs continue to demand little or no accountability from servicers, they will likely go the way of federal efforts to control foreclosures that have failed as a result of relying on voluntary compliance by the lending industry."

NCLC is a nonprofit organization that works with and offers training to legal service, government, private attorneys, and community groups and organizations representing low-income families. It seeks marketplace justice on behalf of low-income and vulnerable Americans.

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  1. 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)

  2. "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.

  3. 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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  5. Some in the Hoosier legal elite consider this prayer recommended by the AG seditious, not to mention the Saint who pledged loyalty to God over King and went to the axe for so doing: "Thomas More, counselor of law and statesman of integrity, merry martyr and most human of saints: Pray that, for the glory of God and in the pursuit of His justice, I may be trustworthy with confidences, keen in study, accurate in analysis, correct in conclusion, able in argument, loyal to clients, honest with all, courteous to adversaries, ever attentive to conscience. Sit with me at my desk and listen with me to my clients' tales. Read with me in my library and stand always beside me so that today I shall not, to win a point, lose my soul. Pray that my family may find in me what yours found in you: friendship and courage, cheerfulness and charity, diligence in duties, counsel in adversity, patience in pain—their good servant, and God's first. Amen."

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