MORTGAGE FORECLOSURE TRIAL COURT ASSISTANCE PROJECT (MFTCAP) Presented by: Elizabeth Daulton,...

MORTGAGE FORECLOSURE TRIAL COURT ASSISTANCE PROJECT (MFTCAP) Presented by: Elizabeth Daulton, Project Manager, Mortgage Foreclosure Trial Court Assistance Project

State- and nationwide foreclosure filings (2005 2009) Pilot county foreclosure filings (2005 2009) Number of settlement conferences requested after legislation took effect on July 1, 2009 Number of settlement conferences requested during first 3 weeks of Allen Co. pilot project Number/results of settlement conferences held to date Future of the Mortgage Foreclosure Trial Court Assistance Program

*2009 foreclosure filings not yet official

2009 - 2010 ALLEN COUNTY MORTGAGE FORECLOSURE FILINGS

Allen, Marion, St. Joseph, Monroe Counties Post-Telephone Conference and Post-Settlement Conference Orders Data Collection Form Case Number Tracking Data Collection in Non-Pilot Counties Number of settlement conferences requested Sample of 1,500 2,500 cases statewide (+/- 5 margin of error)

Example: Delaware County* 295 foreclosures filed between July 1 and December 31, 2009 Of these 295 foreclosure filings, only 21 borrowers (7%) requested a settlement conference. Of these 21 settlement conferences: 5 borrowers (24%) received stay-in-home workouts; 6 borrowers (29%) received no workout (foreclosure); 1 borrower (5%) failed to appear; and 9 borrowers (43%) are still negotiating with the lenders and/or have not yet had a settlement conference. Fewer than 2% of foreclosed Delaware County borrowers received a workout within the first 6 months of SEA 492. *Data collected by Delaware Circuit Court Judge Marianne Vorhees.

CONFERENCE DATES TELEPHONE CONFERENCES SCHEDULED BORROWER DIDNT QUALIFY BORROWER NO-SHOWS SETTLEMENT CONFERENCES REQUESTED FEB. 11 12048 FEB. 16 12057 FEB. 245005 MAR. 212147 MAR. 56033 TOTALS =47116 30

The last Orders for Telephone Conference in Allen County were issued on 2/2/10. As of this date, there were 97 Mortgage Foreclosure filings in Allen Superior Court. Of these 97 filings, 30 borrowers requested a settlement conference. Allen County Response Rate = 30.9% Delaware County Response Rate = 7.1%

MARCH 10MARCH 11TOTALS STAY-IN-HOME WORKOUT 224 (33%) OTHER WORKOUT011 (8%) NO WORKOUT LENDER PROCEEDS WITH FORECLOSURE 011 (8%) CONTINUED TO JUNE 9, 2010325 (42%) LENDER NO-SHOW; SANCTIONS ISSUED101 (8%)

St. Joseph County 1710 MF filings in 2009 Program began April 15 Marion County 8,607 MF filings in 2009 Program will begin late April/early May Monroe County 340 MF filings in 2009 Program set to begin mid-summer Assuming similar MF filing rates and conference request rates in each of our pilot counties, this program could help as many as 3,000 Allen, Marion, Monroe, and St. Joseph County borrowers in 2010.

Please Contact: Elizabeth Daulton Project Manager, Mortgage Foreclosure Trial Court Assistance Project Indiana Supreme Court, Division of State Court Administration 30 South Meridian Street, Suite 500 Indianapolis, Indiana 46204 Tel: (317) 234-7155 Fax: (317) 233-6586 [email protected]

Mortgage Foreclosure: a Nationwide Financial Crisis Coming to a Courtroom Near You Presented by: The Hon. Michael G. Gotsch

Tsunami Warning: Mortgage Foreclosure Crisis In Indiana 45,394 foreclosure actions filed in 2008; 45,394 foreclosure actions filed in 2008; 52% increase in mortgage foreclosure cases from 2003 to 2008 52% increase in mortgage foreclosure cases from 2003 to 2008

Tsunami Warning: Mortgage Foreclosure Crisis In Indiana Mortgage foreclosures now comprise 15% of all civil filings Mortgage foreclosures now comprise 15% of all civil filings Bankruptcy filings in Indiana increased 41% in a single year Bankruptcy filings in Indiana increased 41% in a single year

Tsunami Warning: Mortgage Foreclosure Crisis In Indiana Banks walking away from foreclosed property Banks walking away from foreclosed property Open, Vacant & Vandalized Properties (OVV) = Blighted Open, Vacant & Vandalized Properties (OVV) = Blighted Neighborhoods Neighborhoods

Staying Afloat: Early Response to the Mortgage Foreclosure Crisis Philadelphia County (Philadelphia, Pennsylvania) Philadelphia County (Philadelphia, Pennsylvania) Residential Mortgage Foreclosure Diversion Program

Staying Afloat: Early Response to the Mortgage Foreclosure Crisis Cuyahoga County (Cleveland, Ohio) Cuyahoga County (Cleveland, Ohio) Foreclosure Mediation Program Foreclosure Mediation Program

Staying Afloat: Early Response to the Mortgage Foreclosure Crisis Marion County (Indianapolis, Indiana) Marion County (Indianapolis, Indiana) Mortgage Settlement Conferences homeowners & lenders Mortgage Settlement Conferences homeowners & lenders Hon. Cynthia Ayers, Marion Superior Court Hon. Cynthia Ayers, Marion Superior Court

Catching the Wave: Indiana Responds to the Crisis Local Courts React Case management techniques Case management techniques Additional Notice Requirements Additional Notice Requirements Alternative Dispute Resolution Alternative Dispute Resolution

Catching the Wave: Indiana Responds to the Crisis Indiana Foreclosure Prevention Network Indiana Foreclosure Prevention Network Get Help, Get Help, Get Hope Get Hope

Catching the Wave: Indiana Responds to the Crisis I.C. 32-30-10.5 et seq. I.C. 32-30-10.5 et seq. Regulates mortgage foreclosure actions Regulates mortgage foreclosure actions Creditor must provide notice of intent to initiate foreclosure Creditor must provide notice of intent to initiate foreclosure Creditor must provide notice of right to participate in a settlement conference Creditor must provide notice of right to participate in a settlement conference Foreclosure judgment guidelines Foreclosure judgment guidelines

Catching the Wave: Indiana Responds to the Crisis I.C. 32-30-10.5-8 I.C. 32-30-10.5-8 Requires former owner of real property that is the subject of a judgment of foreclosure to notify each tenant of judgment and of tenants rights

Catching the Wave: Indiana Responds to the Crisis I.C. 24-5-23.5 et seq. I.C. 24-5-23.5 et seq. Regulates residential mortgage lending practices; authorizes regulatory enforcement by Indiana Attorney General Regulates residential mortgage lending practices; authorizes regulatory enforcement by Indiana Attorney General

Plugging the Dike: Other Initiatives Federal Assistance Programs HAMP and HAFA (https://www.hmpadmin.com) Federal Assistance Programs HAMP and HAFA (https://www.hmpadmin.com)

Plugging the Dike: Other Initiatives

Up the River: St. Joseph County Experience Temporary Order

Up the River: St. Joseph County Experience Clerk processes case

Up the River: St. Joseph County Experience Courts Notice to Homeowners

Up the River: St. Joseph County Experience Order of Administrative Transfer

Up the River: St. Joseph County Experience Order for Telephonic Conference

Up the River: St. Joseph County Experience Facilitators Report to be filed with Court and then forwarded to original Judge to include in file. Administrative Judge issues Post-Settlement Conference Order and case is re-assigned to originating Judge

SETTLEMENT CONFERENCES: How They Work or Do They? Hon. Nancy Eshcoff Boyer Allen Superior Court

Purposes of Foreclosure Prevention Legislation Foster communication between lenders and homeowners Facilitate modification of residential mortgages Avoid unnecessary foreclosures

Reaching Homeowners Notices were sent separately in cases pending on July 1, 2009 Notices included in Complaint by Lender resulted in drop in requests Drop in requests was seen statewide

How to Reach the Borrower? Borrowers were not seeing notice and/or were not aware of the right to request a Settlement Conference

Goals of Telephone Conferences Increase awareness of Settlement Conferences Reduce expenses (travel, time) for Lenders and Borrowers Get information exchanged earlier

Telephone Conferences Cases are assigned to a Facilitator Order for Telephone Conference sent to Borrower separately from the service of Complaint Order contains DATE and TIME for Borrower and Attorney for Lender to call Facilitator

Telephone Conf. Benefits Explain to Borrower what a Settlement Conference entails Explore whether Settlement Conference would be beneficial for Borrower

Telephone Conf. Benefits Obtain contact information for representative of Lender/Servicer Facilitator has ability to establish other requirements based on individual circumstances

Issues with Past Settlement Conferences Conferences were only information gathering sessions Expenses (travel, time) for parties to attend in person Few final agreements reached

Perfect Settlement Conference Parties exchange information after Phone Conference Lender has programs to offer Borrower at Settlement Conference Facilitator files Data Collection Form outlining workout reached Court issues order on results

Reality Sets In Borrower unable to follow-up with Lender Documents still being exchanged/processed by Lender at time of Settlement Conference Attorney for Lender seeking Foreclosure while negotiations are continuing

Examples of Difficulties Settlement Conference concludes with negotiations continuing yet Attorney for Lender proceeds with pursuing foreclosure At Summary/Default Judgment hearing Borrower states still working with Lender on modification

Examples of Difficulties No specifically named person at Lender for Borrower to contact regarding file Lender, Servicer and Attorney for Plaintiff have competing interests regarding foreclosure No way for Borrower to follow-up and they are swallowed up/lost in the system

QUESTIONS

Indiana Foreclosure Prevention Network Spring Judicial College April 16, 2010 Presented by Stephanie Reeve Indiana Foreclosure Prevention Network 1-877-GET HOPE www.877GETHOPE.ORG

Scope of the Foreclosure Issue WHAT DOES INDIANAS FORECLOSURE PROBLEM LOOK LIKE? 11 TH in the nation on rate of home loans in foreclosure (4.34% of all mortgage loans in foreclosure per Mortgage Bankers Association) 7 th highest rate of delinquent mortgage loans (11.73% of all mortgage loans past due per Mortgage Bankers Association)

Scope of the Foreclosure Issue HOW IS THAT AFFECTING COMMUNITIES? Reduction in property tax base Preventing a foreclosure can provide a savings for the homeowner, financial institutions, local government, and neighboring homeowners Conservative estimates indicate that one foreclosure costs stakeholders $50,000 Preventing even a fraction of the foreclosures in Indiana will save stakeholders hundreds of millions of dollars

Indiana Foreclosure Prevention Network WHAT IS THE INDIANA FORECLOSURE PREVENTION NETWORK? A public-private coalition of community service and housing-related organizations, government agencies, lenders, realtors, and trade associations WHAT IS THE MULTI-TIERED SOLUTION? 1-877-GET-HOPE helpline and www.877gethope.org A network of trained foreclosure intervention specialists serving every part of the state A marketing campaign that utilizes grassroots strategies, media, and community events

Indiana Foreclosure Prevention Network OVERVIEW OF THE IFPN HELPLINE AND WEBSITE Since July 2009, the helpline receives an average of 2,225 calls per month Of those calls, approximately 1,300 (60%) of those clients are referred to one of 25 Network Agencies for foreclosure counseling services each month The www.877gethope.org website also generates thousands of hits each month. An average of 264 clients complete an online application. All of these clients are referred to Network Agencies for additional counselingwww.877gethope.org

Inside the Numbers REASON FOR DEFAULT 60%Reduction in or Loss of Income 13%Medical Expenses 11%Poor Money Management or Excessive Debt 5%Death or Divorce

Inside the Numbers WHERE ARE THE MAJORITY OF IFPN CLIENTS Using data since July of 2009, the following areas have the highest volume of clients: Marion County (16.76%) Lake County (8.97%) Allen County (3.95%) St. Joseph County (3.59%) Hamilton County (3.38%) Elkhart County (2.38%) Madison County (2.32%) Johnson County (2.15%) Porter County (2.12%) Hendricks County (2.06%)

The Role of a Foreclosure Counselor Determine the financial situation of the borrower and complete a budget Determine what alternatives to foreclosure (a workout) may be available or best suited for the homeowner Develop an action plan, which requires the participation of the client Submit proposals to the lender Prepare the client for a settlement conference Assist the client in finding an attorney, if needed If necessary, helping to prepare the client for a foreclosure and assisting with finding them rental housing

IFPN Counselor Training Overview The state certifies IFPN agencies and their employees for foreclosure counseling Currently, there are 89 certified foreclosure counselors and 25 IFPN Network Agencies that serve all 92 Indiana counties To become certified by the State, it requires an initial 60 hours of training. Training includes: Basic foreclosure and budget counseling Advanced foreclosure and budget counseling Indiana-specific trainings Additional trainings on specific programs (Settlement Conferences, MHA, Fannie D4L, etc.)

A Counselors Role in a Settlement Conference To determine what mortgage payment the client can afford To determine what workout(s) the client may be eligible for. This includes determining whether they will be able to stay in the home

What is a Workout? Short Sale Sale of Home or Refinance Deed in Lieu of Foreclosure Assumption of Mortgage Partial Claim Agreement Loan Modification or Repayment Plan Loan Reinstated.

What is a Workout? OPTIONS TO STAY IN THE HOME Refinance Paying off one loan by obtaining another to secure better loan terms (like a lower interest rate) Loan Modification: An option where lender modifies loan to lower interest rate and/or extend the term of the mortgage loan and thus reduce the monthly payments Repayment Plan: An agreement where the borrower agrees to make additional payments to pay down past due amounts while making regularly scheduled payments

What is a Workout? OPTIONS TO STAY IN THE HOME (Cont). Partial Claim Agreement: An option that allows a borrower, with help from a lender, to get an interest-free loan from HUD to bring their mortgage payments up to date Loan Reinstated: A phase of the foreclosure process where the homeowner has an opportunity to stop the foreclosure by paying money that is owed to the lender

What is a Workout? OPTIONS THAT MEAN GIVING UP HOME Sale of Home Short Sale: A procedure in which the borrower is allowed to sell a property for an amount less than what is owed on it to avoid a foreclosure. This sale fully satisfies the borrower's debt Deed in Lieu of Foreclosure: To avoid foreclosure, a deed is given to the lender to fulfill the obligation to repay the debt; this process does not allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure

What is a Workout? OPTIONS THAT MEAN GIVING UP HOME (Cont). Assumption of Mortgage: When a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require a credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means that the mortgage may not be transferable to a new buyer. Instead, the lender may make you pay the entire balance that is due when you sell the home

Making Home Affordable and Other Federal Programs MHA is an umbrella for several federal mortgage foreclosure prevention programs. They include: Home Affordable Modification Program Second Lien Modification Program (2MP) Home Affordable Refinance Program Home Affordable Foreclosure Alternatives Program Note: Recent announced changes will do a couple of things: Allow for modifications under HAMP for unemployed workers Require full underwriting and documentation for HAMP, in order to eliminate the use of temporary modifications that RARELY become permanent under this program Incentives under HAFA for both the homeowner and the lender, to encourage short-sales as an alternative to foreclosure

Making Home Affordable and Other Federal Programs Fannie Mae Deed-for-Lease If a homeowner with a Fannie Mae mortgage determines that a deed-in-lieu to foreclosure is their best option, there is a possibility that they can continue to live in their home as a tenant for up to a year

DONT LET THE WALLS FORECLOSE IN ON YOU Questions? Thank You!

MORTGAGE FORECLOSURE TRIAL COURT ASSISTANCE PROJECT (MFTCAP) Presented by: Elizabeth Daulton,...

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