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IBA: Mortgage Foreclosure in Marion County

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By The Hon. Cynthia Ayers

In November 2008, the Indianapolis Bar Association Board of Directors approved a resolution authorizing the formation of a new task force charged with finding ways to confront the explosion in mortgage foreclosures in Marion County. The Indianapolis Mortgage Foreclosure Task Force (IMFTF) was established, comprised of volunteer lawyers, judges, and state agency managers. Members included lawyers from the Indiana Bankers Association, the Attorney General’s Office, Legal Services Organization, United Auto Workers Legal Services, the Indiana Mortgage Foreclosure Prevention Network, the Christian Legal Clinic, HUD, debt management agencies, members of the private bar and other concerned citizens.

The initial responsibility of the IMFTF was to determine the magnitude of the mortgage foreclosure crisis and develop an appropriate action plan. The committee developed ideas on how the bar association might help distressed homeowners and lenders and the entire community as a whole. Members quickly realized that in addition to families facing personal financial crisis, banks were being inundated with foreclosed properties. Empty homes were often magnets for criminal activity and consequently, directly related to rapidly falling home values.

Subcommittees were set up to facilitate a diversified approach to critical issues. Three major objectives were identified: court case-management, with the use of Alternate Dispute Resolution methods to promote face-to-face meetings between borrowers and lenders; education and training of lawyers, to facilitate pro bono representation of homeowners; and collaboration with the Indiana Housing Foreclosure Network, to encourage the referral of borrowers to credit counseling and debt management services.

For years, the Indiana foreclosure process followed a general routine. Initially, the lender filed suit after payments were missed, service was obtained on the defendant homeowner, the appropriate pleadings were presented timely to the court, and if done properly, default judgment was entered. Next, the defaulted borrowers either voluntarily left or stayed in possession until evicted after a Sheriff’s Sale. As the economic crisis worsened nationwide, it became increasingly apparent that an opportunity for settlement discussions may be a better approach for all parties. Based upon success in Pennsylvania, Ohio, Connecticut, and Illinois, the IMFTF drafted a local rule, later approved by the Marion Superior Court in March 2009. The local rule required a settlement conference between borrower and lender in owner-occupied foreclosure cases.

Concurrently, the federal government required banks to offer loan modification programs to eligible borrowers. In July 2009, SB492, modeled in large part after the aforementioned Marion County local rule and sponsored by Senator Karen Tallian of Portage, Indiana, was enacted. (I.C. 32-30-10.5 et seq.). SB492 made settlement conferences available to all homeowners who requested them within certain timelines.

Since the passage of the local rule and SB492, much progress has been made. In Marion Civil Court IV, for example, 197 settlement conferences have occurred; of those, 27% resulted in dismissal of the foreclosure action and 15% are pending with proposed settlements.

In early 2010, the Indiana Supreme Court introduced pilot projects in Marion, Allen, Monroe, and St. Joseph counties which provide logistical coordinators and facilitators who manage the settlement conferences. In Marion County, three courts are part of the pilot program: Circuit Court and Civil Courts IV and X. This program has streamlined the foreclosure process, proving highly beneficial to successful outcomes. In-person facilitation has insured good faith settlement negotiation between borrower and lender.

In addition to these measures, other members of the IMFTF were educating and training volunteer attorneys to represent borrowers pro bono. To date, over 1000 attorneys statewide have received foreclosure training. Members involved with foreclosure prevention at the state level have also continued to work by keeping the crisis statistics current, providing access to twenty-four hour debt counseling services, and affording relief to homeowners through the “Get Hope Get Help Hotline,” (1-800-382-5516).

In sum, the Indianapolis Mortgage Foreclosure Task Force has met many of its goals and continues to move forward. Improvements are needed to encourage and expedite case resolution, such as the linking of homeowners directly to a legal-advice hotline. A better process for the exchange of information between debt counselors and case facilitators may reduce duplicative efforts. Additionally, the establishment of a confidential E-Repository for all settlement-related documents could eliminate cancelled meetings.

The Indianapolis Bar Association can be proud of the accomplishments of the Mortgage ForeclosureTask Force. Desperate times have called for a much needed change in mortgage foreclosure case management and local lawyers and judges have answered the call.•

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  1. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  2. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  3. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  4. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  5. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

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