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Mortgage Foreclosure: a Nationwide Financial Crisis Coming to a Courtroom Near You

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Mortgage Foreclosure: a Nationwide Financial Crisis Coming to a Courtroom Near You

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  1. <?xml version="1.0"?><AllQuestions /> <?xml version="1.0"?><AllResponses /> <?xml version="1.0"?><Settings><answerBulletFormat>Numeric</answerBulletFormat><answerNowAutoInsert>No</answerNowAutoInsert><answerNowStyle>Explosion</answerNowStyle><answerNowText>Answer Now</answerNowText><chartColors>Use PowerPoint Color Scheme</chartColors><chartType>Horizontal</chartType><correctAnswerIndicator>Checkmark</correctAnswerIndicator><countdownAutoInsert>No</countdownAutoInsert><countdownSeconds>10</countdownSeconds><countdownSound>TicToc.wav</countdownSound><countdownStyle>Box</countdownStyle><gridAutoInsert>No</gridAutoInsert><gridFillStyle>Answered</gridFillStyle><gridFillColor>255,255,0</gridFillColor><gridOpacity>50%</gridOpacity><gridTextStyle>Keypad #</gridTextStyle><inputSource>Response Devices</inputSource><multipleResponseDivisor># of Responses</multipleResponseDivisor><participantsLeaderBoard>5</participantsLeaderBoard><percentageDecimalPlaces>0</percentageDecimalPlaces><responseCounterAutoInsert>No</responseCounterAutoInsert><responseCounterStyle>Oval</responseCounterStyle><responseCounterDisplayValue># of Votes Received</responseCounterDisplayValue><insertObjectUsingColor>Red</insertObjectUsingColor><showResults>Yes</showResults><teamColors>Use PowerPoint Color Scheme</teamColors><teamIdentificationType>None</teamIdentificationType><teamScoringType>Voting pads only</teamScoringType><teamScoringDecimalPlaces>1</teamScoringDecimalPlaces><teamIdentificationItem></teamIdentificationItem><teamsLeaderBoard>5</teamsLeaderBoard><teamName1></teamName1><teamName2></teamName2><teamName3></teamName3><teamName4></teamName4><teamName5></teamName5><teamName6></teamName6><teamName7></teamName7><teamName8></teamName8><teamName9></teamName9><teamName10></teamName10><showControlBar>Slides with Get Feedback Objects</showControlBar><defaultCorrectPointValue>0</defaultCorrectPointValue><defaultIncorrectPointValue>0</defaultIncorrectPointValue><chartColor1>187,224,227</chartColor1><chartColor2>51,51,153</chartColor2><chartColor3>0,153,153</chartColor3><chartColor4>153,204,0</chartColor4><chartColor5>128,128,128</chartColor5><chartColor6>0,0,0</chartColor6><chartColor7>0,102,204</chartColor7><chartColor8>204,204,255</chartColor8><chartColor9>255,0,0</chartColor9><chartColor10>255,255,0</chartColor10><teamColor1>187,224,227</teamColor1><teamColor2>51,51,153</teamColor2><teamColor3>0,153,153</teamColor3><teamColor4>153,204,0</teamColor4><teamColor5>128,128,128</teamColor5><teamColor6>0,0,0</teamColor6><teamColor7>0,102,204</teamColor7><teamColor8>204,204,255</teamColor8><teamColor9>255,0,0</teamColor9><teamColor10>255,255,0</teamColor10><displayAnswerImagesDuringVote>Yes</displayAnswerImagesDuringVote><displayAnswerImagesWithResponses>Yes</displayAnswerImagesWithResponses><displayAnswerTextDuringVote>Yes</displayAnswerTextDuringVote><displayAnswerTextWithResponses>Yes</displayAnswerTextWithResponses><questionSlideID></questionSlideID><controlBarState>Expanded</controlBarState><isGridColorKnownColor>True</isGridColorKnownColor><gridColorName>Yellow</gridColorName></Settings> <?xml version="1.0"?><AllAnswers /> Mortgage Foreclosure: a Nationwide Financial Crisis Coming to a Courtroom Near You Presented by: The Hon. Michael G. Gotsch Panel members: The Hon. Cynthia Ayers, The Hon. Nancy Boyer, and The Hon. Francie Hill

  2. Tsunami Warning:Mortgage Foreclosure Crisis In Indiana • 50% increase in mortgage foreclosure cases over a five-year period

  3. Tsunami Warning:Mortgage Foreclosure Crisis In Indiana • 43,804 foreclosure actions filed in 2007 • 45,394 foreclosure actions filed in 2008, a roughly 4% increase

  4. Tsunami Warning:Mortgage Foreclosure Crisis In Indiana • Mortgage foreclosures now comprise 15% of all civil filings

  5. Tsunami Warning:Mortgage Foreclosure Crisis In Indiana • Bankruptcy filings in Indiana have increased by 41% in one year

  6. Tsunami Warning:Mortgage Foreclosure Crisis In Indiana • Banks walking away from foreclosed property

  7. Tsunami Warning:Mortgage Foreclosure Crisis In Indiana • O.V.V. – Open, Vacant & Vandalized Properties = Blighted Neighborhoods

  8. Catching the Wave and Staying Afloat:Courts Respond to the Crisis • Case management techniques

  9. Catching the Wave:Courts Respond to the Crisis • Additional Notice Requirements

  10. Staying Afloat:St. Joseph County Experience • Emergency Local Rules require additional notice to defendants • Foreclosure Actions • Summary Judgment

  11. Catching the Wave:Courts Respond to the Crisis • Alternative Dispute Resolution

  12. Staying Afloat:Other State Initiatives to Deal With the Mortgage Foreclosure Crisis • Philadelphia County (Philadelphia, Pennsylvania) • Residential Mortgage Foreclosure Diversion Program • Cuyahoga County (Cleveland, Ohio) • Foreclosure Mediation Program

  13. Staying Afloat:Marion County Experience • Marion County (Indianapolis, Indiana) • Mortgage Settlement Conferences – homeowners & lenders • Hon. Cynthia Ayers, Marion Superior Court

  14. Catching the Wave:Other State Resources Respond to the Crisis • Pro Bono Legal Services • Loan Modification • Negotiation • Short Sales

  15. Staying Afloat:Indiana Housing and Community Development • Indiana Foreclosure Prevention Network “Get Help, Get Hope”

  16. Plugging the Dike:Recent State Legislative Initiatives • General Assembly Passes S.B. 492 (H.B. 1637 ) – IC § 32-30-10.5 • Effective July 1, 2009. • Places various limitations on residential mortgage foreclosure actions and final judgments. • Only applies to secured property that is a debtor’s primary residence.

  17. Ind. Code § 32-30-10.5-8 Pre-suit requirements • Creditor must provide debtor notice of intent to initiate foreclosure 30-days prior to filing the complaint. • Encourages debtor to contact the IFPN to speak with a prevention counselor.

  18. Ind. Code § 32-30-10.5-8,-11Jurisdictional Requirements • For foreclosure cases pending as of July 1, 2009, the court must send debtors a notice of right to participate in settlement conference before issuing a final judgment. • Beginning July 1, 2009, creditors must serve debtors a notice of right to participate in a settlement conference, with the complaint, and attach a copy to the complaint, when initiating a foreclosure action.

  19. Exceptions to Notice and Right to a Settlement Conference • Property is not the debtor’s primary residence; • The loan has been the subject of a prior foreclosure prevention agreement, and the debtor has defaulted with respect to the terms; • Bankruptcy proceedings are pending; or, • A settlement conference would be of limited value based on the result of a prior loss mitigation effort between the plaintiff lender and defendant debtor.

  20. Settlement ConferenceYes, or No? • If the debtor says NO, or does not respond within sixty days of receipt of the pre-suit notice, or thirty days of receipt of the complaint notice, the court may issue a foreclosure judgment. • If the debtor says YES, the court must provide a notice of settlement conference and schedule it within 25-60 days of the request unless the parties mutually agree to another specified date.

  21. Settlement ConferenceOrder Requirements • Date/Time/Location of conference, unless parties submit to the court a stipulation to modify the date/time/place; • Encourage debtor to contact the IFPN to speak with a foreclosure counselor, and include IFPN contact info; • Documentation requirements for debtor/creditor ; and, • Parties have right to be represented by an attorney or assisted by foreclosure counselor.

  22. Settlement Conference Documentation Requirements • Creditor must bring: • Copy of the original note and mortgage; • Payment record substantiating the default; • Itemization of all amounts claimed by the creditor as being owed on the mortgage. • Atransaction history showing all account activity • Debtor must bring documentation of: • Present and future income; • Expenses, assets, and liabilities; • Employment history; and, • Any other documents or information the court deems necessary.

  23. Settlement Conference Details • The court may issue orders requiring certain people attend the settlement conference. • The creditor must have someone attend the settlement conference who has authority to negotiate a prevention agreement. • The court may order, for cause shown, that the parties reconvene a settlement conference anytime prior to judgment being entered. • The judge has discretion whether to attend a settlement conference, designate a senior judge to preside, or order the parties to use a mediator.

  24. After the Conference • If the parties agree to enter into a prevention agreement, it must be reduced to writing, signed by both parties, and filed with the court no later than seven days after the signing – creditor can elect to dismiss or stay foreclosure proceeding. • If the parties do not agree on a prevention agreement, no later than seven days after the conference, the creditor must notify the court, and proceedings continue.

  25. Plugging the Dike:What about Tenants? • Indiana law does not provide foreclosure protections for tenants. • Federal law does provide tenants some foreclosure protections.

  26. Questions, Comments, Review

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