Mortgage Foreclosure Project Update—
Indiana’s mortgage foreclosure rate is among the highest in the country, largely due to the decline of the automotive and manufacturing industries. In 2008, the state saw 45,394 foreclosures—a more than 50 percent increase since 2003. In January 2009, Chief Justice Randall T. Shepard addressed this crisis, vowing to train more professionals than any other state on how to deal with foreclosure cases. The “Back Home in Indiana—Guiding Homeowners through Foreclosure” training program began in March 2009 with sessions across the state, and in October 2009, this goal was reached—more than 1,100 attorneys, judges, and mediators received foreclosure prevention training.
State law now requires a creditor to notify a homeowner facing foreclosure of his or her right to participate in a settlement conference. Indiana Code 32-30-10.5 et seq. levies a $50.00 filing fee on all mortgage foreclosure cases filed after July 1, 2009, and requires that the homeowner be notified of his or her right to request a settlement conference with the lender. A portion of this filing fee is remitted to the Indiana Supreme Court to conduct training and hire coordinators to organize and assist with these settlement conferences.
As of early 2010, very few homeowners had taken advantage of the settlement conference provision. Many individuals who have already received foreclosure documents simply don’t open or read any mail they receive from the lender. Others don’t know precisely what a settlement conference entails or believe that they need to hire an attorney but are unable to afford one.
After discussing the situation with a number of trial judges, the Division of State Court Administration has partnered with the Indiana Housing and Community Development Authority (IHCDA) to create a system for coordinating all settlement conferences on a county or district-wide basis.
This program was launched on a pilot basis in January 2010 in Allen, Marion, and St. Joseph counties. A project manager at State Court Administration oversees local logistical coordinators, who coordinate with pro bono attorneys, facilitators, homeowners, and lenders to schedule and take part in settlement conferences.
Although this program is still very new, it appears to be having some success when compared to settlement conference rates in non-pilot counties. According to Delaware County Judge Marianne Vorhees, of the 295 foreclosures filed in Delaware Circuit Court from July 1 to December 31, 2009, only 21 borrowers—or 7 percent—had requested a settlement conference. As of February 16, 2010, 5 of these cases were successful (meaning that the borrowers remained in the home), while 6 were unsuccessful, 1 borrower did not appear, 3 were still negotiating with the lenders, and 5 of the conferences had not yet occurred.
In contrast, the settlement conference model implemented by Judge Nancy Boyer of Allen Superior Court has resulted in at least 20 settlement conferences requested in less than 2 weeks. Under this structure, Judge Boyer collected all mortgage foreclosure filings dating back to January 1, 2010, and sent out an “Order for Telephone Conference” in each case, requiring the borrowers and lenders to call into the court on a certain date and time and speak with a facilitator. During these telephone conferences, the facilitator explains to the borrower what a settlement conference involves, and asks whether the borrower would like to request one. If the borrower declines, the foreclosure case proceeds; if the borrower requests a conference, the facilitator sets a time and date for the settlement conference and determines what documents each party must provide in order to negotiate. A second order confirming the conference date and describing all required documents is then issued. The first group of these telephone conferences took place on February 11, 2010; by February 23, 20 of the 24 borrowers who took part in a telephone conference had requested a settlement conference.
This data seems to show the importance of an “opt-out,” rather than “opt-in” model; this ensures that the maximum number of borrowers are reached, and that those borrowers who are contacted may make an informed decision whether or not they would benefit from a settlement conference.
Attorneys and mediators who have received training through the “Back Home in Indiana” program are encouraged to take part in this project. Through funding from the IHCDA, pro bono attorneys are reimbursed up to $25.00 per conference for reasonable expenses (parking, meals, and office supplies, for example), while facilitators receive $150.00 per every four settlement conferences conducted.
Although Allen County is the only court system currently operating under this pilot project, several judges in St. Joseph, Marion, and Monroe counties are working hard to get their settlement conference programs up and running by early summer. If the projects in these counties are successful, they will be implemented on a state-wide basis beginning in early 2011.
Any attorneys, judges, or mediators who wish to assist with this project should contact David Remondini, Chief Deputy Executive Director of the Division of State Court Administration, [email protected], or Elizabeth Daulton, Project Manager of the Mortgage Foreclosure Trial Court Assistance Project, [email protected], or by telephone at 317-232-2542. More information can be found at the Mortgage Foreclosure Task Force website, www.courts.in.gov/home.