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State’s Judges Test Mediation in Foreclosure Suits

Thursday, December 20, 2007 at 5:00 AM

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Ohio's judges are looking at ways to help county courts deal with rapidly growing dockets of foreclosure cases. Judges are urging lenders and borrowers in trouble to hammer out solutions before foreclosure suits are settled in court. Ideastream®'s Mhari Saito reports.

Every day when he comes to work, Judge Chris Collier signs a 6-inch thick file of sheriff’s sale documents in his chambers at Medina County Common Pleas Court. The legal papers describe the path of Medina homes that have gone through foreclosure and been bought back by the lender. Like the rest of Ohio, Medina’s courts are flooded with foreclosure cases. Five years ago, Collier signed one or two sheriff’s sale documents a week. Now he’s dealing with up to five a day. Foreclosure suits now make up nearly half of the county’s civil docket.

Judge Chris Collier: All of us judges got very very good at moving those foreclosure cases like that, but that works against you when you’ve got a homeowner who has an opportunity to try to work with a bank or lending institution to stay in the house.

So now, Collier and judges around the state are considering ways to slow down the foreclosure process for homeowners who ask. In Medina County, Collier has ordered 34 cases to go to the court’s mediator. That means lawyers for the homeowner and the lender had to meet with Medina County Court’s Bruce Francis before the case could continue.

Bruce Francis: The lenders have really surprised me by their willingness to come to the table and if there’s someone on the other side that wants to work it out or explore the options they’ve been very willing to do that.

Ohio’s largest counties are now exploring whether a similar tactic might work for them.  Ohio Supreme Court Chief Justice Thomas Moyer says his office is helping courts in Cuyahoga, Montgomery and Franklin counties design programs that would bring lenders and homeowners who can’t keep up with their mortgage payments to the table.

Chief Justice Thomas Moyer: It doesn’t mean that every loan, every situation, is going to be successfully mediated, but it puts the focus where it should be and that’s getting the parties together to sit down and talk about how they can talk about a new arrangement.

In Cuyahoga County, judges are considering pro bono help to provide mediation and legal representation for borrowers who request it. In Medina, borrowers who don’t have a lawyer can send a written letter to the judge and have that serve as a legal answer to a foreclosure suit. Richland County Common Pleas Court Judge James DeWeese met with lenders yesterday to discuss a mediation plan for foreclosure suits. Ohio State Treasurer Richard Cordray says the hope is to stem the flood of foreclosures.

Treasurer Richard Cordray: We’re trying to find every avenue we can to try to minimize that damage, minimize the number of people who lose their homes and minimize the number of houses that end up vacant in our community and bring down everybody else’s property values as well.

Lawyers representing loan servicers say they welcome any efforts to help keep Ohioans in their homes. Rick Rothfuss of Cincinnati’s Lerner, Sampson and Rothfuss says his lawyers have been keeping up with court-ordered mediation.

Rick Rothfuss: It’s an opportunity to have the lender and the borrower at the table together and it does create some dialogue, but the instances of that leading to a resolution of the delinquency doesn’t seem to be greater than if there isn’t mediation.

Four of the 34 cases sent to mediation from Medina County Judge Chris Collier’s court have resulted in a win for the borrower. Collier’s Chief Magistrate Jim Leaver says time will yield more positive results. He says, though, that mediation does slow the foreclosure process.

Jim Leaver: It does slow it down. If it helps somebody get themselves back on track and put themselves in the position where the homeowner and the lender can agree on a way to save their house then obviously it’s worth it. So it’s really not a time concern.

And not all borrowers can afford the homes that got them into trouble. Judge Chris Collier says any homeowner that goes into mediation needs to bring financial documents to show how they would pay for any new loan.

Chris Collier: We can’t make money appear and make people necessarily remain in their homes. But if we can untrack the case for a while and get these things in mediation, I think these people have a shot that they wouldn’t have had otherwise.
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Tags

Economy, Facing the Mortgage Crisis, Other, Housing/Real Estate

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