By Steven C. Bechtel
Civil Magistrate for Judge Roger E. Binette, Erie County Common Pleas Court
More than a year ago, Chief Justice Thomas Moyer, Ohio Supreme Court, strongly urged the Common Pleas Courts in Ohio to develop plans to address the mortgage foreclosure crisis in Ohio. And "crisis" it is. In calendar year 2008, Erie County saw approximately 550 foreclosure cases filed. By comparison, in the mid to late 1990s the number of foreclosures filed annually in Erie County averaged around 35.
While the Register recently focused on Judge Tygh Tone's efforts to address the "crisis," the Register left the mistaken impression that Judge Tone is the only local judge making an effort. Judge Tone's efforts are to be applauded. This is not intended, in any way, to disparage his plan or to make relative comparisons.
However, there is another plan in force, which has been in place since April 15, 2008. Since there are differences in the approaches taken, the public should be aware of the differences and what to do if they receive a complaint in foreclosure.
Beginning about a year ago, Judge Roger Binette initiated a new procedure for handling foreclosure cases. As of April 15, 2008, all foreclosure cases were set for a settlement/case management conference within 120 days of filing. The homeowners are automatically sent notice of the hearing date. The express purpose of the conference is to see if the case can be resolved by some alternative to foreclosure. During the first 120 days, the court discourages the filing of motions to obtain judgment by banks until after the conference is conducted.
Judge Binette's plan differs from Judge Tone's in that the homeowner automatically is sent a notice of the conference at the address listed on the complaint. At the conference, the attorney for the bank and an authorized representative of the bank appear by telephone. This assists homeowners who have trouble reaching people responsible for servicing their loans. Other matters covered at the conference are the options available, what the bank or servicer needs in the way of financial information to review those options, what plans may be available outside those offered by the bank, the best manner and to whom the financial information needs to be submitted. Frequently, follow-up conferences are set to give the homeowner an opportunity to collect necessary information or to give the bank/servicer time to review the material and determine what, in any, options are available and feasible.
During 2008, foreclosure cases were assigned to Judge Binette's docket. All 75 cases filed in 2008 were scheduled for the settlement conference. To date, the court has received 104 entries of dismissal. Meaning in those cases some alternative to foreclosure was reached and the banks dismissed their cases. In the largest majority of these 104 dismissed cases, homeowners reached a settlement with the bank in some form of loan modification, forbearance or other alternative. Approximately 50 of the 275 cases filed in 2008 remain pending and Judge Binette's office is reasonably optimistic that another 15 or so of the remaining 50 cases will result in dismissal.
In addition to the dismissals, Binette's office has assisted the parties in 16 cases doing agreed entries where the homeowner agrees they are in foreclosure, and has insufficient means to keep the property. In such cases, the bank agrees to waive any deficient judgment. In essence, the bank agrees to accept only what the property brings at sheriff's sale and waives any deficiency between what the property brings at sheriff's sale.
The court stresses the importance of complying with the hearing notice and attending the settlement conference. When the property owner does not appear and has not filed an answer, the court has little to no alternative but to grant the bank foreclosure and order the property sold. The best advice that a homeowner facing foreclosure can receive, is to not avoid the problem, but address it by attending the settlement/case management conference (if your case is assigned to Judge Binette) or calling Judge Tone's office (if you case is assigned to Judge Tone). Thereafter, the homeowner should begin to gather or prepare the following items, which the banks/servers universally request: a hardship letter (explaining why the mortgage payments have been missed); work stubs and/proof of income for the past two months; last year's federal income tax return and the last two months bank statements. Most banks/servicers also want an income-expense itemization for a month (example -- what is spent monthly for food, gas, utilities, credit card, auto loans, etc.).
Another helpful hint is that, to the extent possible, save the money you would have spent for your mortgage payment and put it in a special account. To the extent a homeowner has some funds available to pay toward the delinquent payments, the more likely the bank/servicer will be willing to work with you.
Facing foreclosure can be intimidating and embarrassing. But the problem will not just go away. Putting off the matter will only dig a deeper hole. Erie County Common Pleas Court has developed procedures that assist and provide hope!
Please take advantage of the procedures and attend the conferences set with Judge Binette's staff or call Judge Tone. The court can only help those who take that first step.