Efforts to avoid mortgage foreclosures coordinated

AG: Best Practices recommendations sprang from Supreme Court task force

INDIANAPOLIS, IN – October 10, 2011 – (RealEstateRama) — As all three branches of state government have responded to the high level of mortgage foreclosures in Indiana, Attorney General Greg Zoeller noted the role of the Indiana Supreme Court in protecting the legal rights of borrowers and requiring mortgage lenders to follow the law.

Zoeller in particular highlighted the Indiana Supreme Court’s Mortgage Foreclosure Task Force that developed new guidelines intended to protect homeowners and deter abuses of the mortgage foreclosure process. The task force includes consumer advocates, judges, law professors, creditors’ attorneys and the Attorney General’s Office; and its recommendations are collectively termed the Mortgage Foreclosure Best Practices. At the conclusion of the task force’s deliberations, the Attorney General formally brought the Best Practices to the Supreme Court in a petition filed in January 2011.

“The Indiana Supreme Court should be commended for their leadership as a co-equal branch of government in the way they worked with the executive and legislative branches to address the problems in the mortgage foreclosure system. There remain national problems that continue to plague the foreclosure system that require more be done to ensure fairness for those at risk of losing their dream of home ownership, for which my office continues to work toward a fair resolution for everyone,” Zoeller said.

As noted in the Supreme Court’s order today, six of the task force’s recommendations submitted in a petition to the Court by the Attorney General became part of state statute through a bill the 2011 Legislature passed. Senate Enrolled Act 582 took effect July 1. Among other things, the new law strengthens borrowers’ rights to a settlement conference, where the distressed homeowner and lender can attempt to work out loan modification – and perhaps negotiate a repayment plan so foreclosure can be avoided, or arrange a “short sale” or deed in lieu of foreclosure so that the homeowner can give up the house and move on without protracted litigation. The new law also allows trial judges to hold lenders accountable through civil penalties and sanctions for violating borrowers’ legal rights.

Other recommendations in the petition that are not part of statute or court-ordered rule will be task force guidelines for trial courts supervising foreclosure proceedings, the Supreme Court noted today, citing the need to maintain flexibility given the fluid and frequently-changing nature of the mortgage industry.

Zoeller also praised the efforts of the Supreme Court’s Mortgage Foreclosure Trial Court Assistance Project (MFTCAP), launched in February 2010, where court-appointed facilitators contact homeowners facing foreclosure to ensure they are aware of their right to settlement conferences, and to bring both parties to the table for a potential settlement or “workout.”  Moreover, the Best Practices already have been adopted by many Indiana courts in the 20 counties in the MFTCAP, such that two-thirds of Indiana foreclosure filings are already being litigated under the Best Practices model.

The Attorney General’s Homeowner Protection Unit (HPU) has filed numerous lawsuits against foreclosure-rescue consultants, companies that operate illegally and defraud consumers by claiming they can – for a fee – prevent foreclosure.

Rather than being scammed by an illegal foreclosure rescue consultant, at-risk homeowners are instead encouraged to contact the Indiana Foreclosure Prevention Network or IFPN. The state-run nonprofit network of housing counselors offers useful advice to homeowners – at no charge – on steps to avoid foreclosure or to mitigate loss. Zoeller thanked Lieutenant Governor Becky Skillman’s Office and Indiana Housing and Community Development Authority which oversee IFPN. The nonprofit network can be contacted toll-free at 1-877-GET-HOPE or online at www.877gethope.org

In addition, Zoeller and the attorneys general of other states are participating in a multi-state investigation of fraudulent and illegal practices in the mortgage-servicing industry. Led by Iowa’s attorney general, the ongoing investigation focuses on servicer abuses, including mortgage lenders whose employees signed foreclosure documents and filed them in court without reading or authenticating them – a practice called “robo-signing” that contributed to many errors and faulty or needless foreclosure proceedings.

“Addressing the legal, economic and social problems caused by mortgage foreclosure is an incredibly complicated task but I am encouraged that dedicated people in the Indiana Supreme Court, legislative branch, executive branch and Attorney General’s Office have collaborated to assist Hoosiers in difficult situations, and spare some from the trauma of foreclosure,” Zoeller said.

NOTE: The Indiana Supreme Court’s order on the Petition for Mortgage Foreclosure Best Practices is at this link:
http://www.in.gov/judiciary/orders/other/2011/94s00-1101-ms-3a.pdf

The Petition for Mortgage Foreclosure Best Practices is at this link:
http://www.in.gov/portal/news_events/files/Petition_SC_MortgageForeclosureBestPractices.FILESTAMPED.1.3.11.pdf

Contact:
Bryan Corbin
Phone: 317.233.3970
Email: Bryan.Corbin (at) atg.in (dot) gov

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