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Though it might be August before Allen County court officials see any changes from a new mortgage law taking effect next week, they will be ready July 1.
In the spring, the state legislature took steps to try to help stem the tide of foreclosures, which reached a peak in Allen County in 2007 with about 2,700; there were about 2,500 last year.
The legislation, signed into law by Gov. Mitch Daniels in early May, requires mortgage lenders or creditors seeking foreclosure action to send a notice to the borrower at least 30 days in advance, to encourage the homeowner to work with a mortgage counselor.
Creditors also must include contact information for the Indiana Housing and Community Development Authority’s Indiana Foreclosure Prevention Network.
If that notice doesn’t work, a second notice will be sent when the foreclosure is filed, informing the debtor he or she may schedule a settlement conference through the court.
It is those meetings for which Allen Superior Court Judge Nancy Boyer and Allen Circuit Court Judge Thomas Felts are gearing up. Currently, Allen County Circuit Court handles about 55 percent of the county’s foreclosures, with Superior taking the rest.
Felts said the new law requires that three parties be present at the settlement conferences – the debtor; the attorney representing the creditor; and someone from the mortgage lender with the authority to make a decision about the loan.
The debtor may also have a lawyer or a mortgage counselor present, Felts said.
Boyer thinks it will be good to get everyone together in the same place.
“Whether they come to any agreement or not, at least they’ve had the opportunity to discuss the alternatives,” she said.
Some of those alternatives include developing new terms for the loan and putting off the foreclosure action for as long as the new terms are adhered to, Boyer said.
Mary Gaskill, a mortgage counselor at Consumer Credit Counseling Services of Northeast Indiana, said her agency is not part of the foreclosure prevention network, though it does offer extensive mortgage counseling.
She is concerned, however, about the ability to enforce the requirements on mortgage companies and with the difficulties in dealing with the mortgage companies in general, particularly if the loans have been sold to another company.
“These mortgage lenders are unapproachable,” she said. “They can write that law, but how are they going to enforce it?”
Felts said the courts will not process the foreclosure unless they see that the required notifications have been sent out and received.
“We won’t act until we have (proof),” he said.
The state’s judiciary is also moving to deal with the foreclosure crisis, establishing a statewide training program for judges and volunteer lawyers in order to help homeowners.
The attorney and mediator training in Allen County is scheduled for July 8 at the Allen County Bar Association, according to Nick Hursch, a law clerk for Allen Circuit Court.
