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Saturday, July 26, 2008

Courts - "Some Judges Stiffen Foreclosure Standards"

Amir Efrati of the WSJ reports in an article now freely available that begins:

A cadre of state-court judges scrutinizing foreclosure actions in a string of recent rulings have discovered flaws in documents that borrowers may be able to use to keep their homes.

The judges, including a committee from the Kings County Supreme Court in Brooklyn, N.Y., are highlighting shortcuts taken by mortgage companies in court filings, which borrowers might be able to exploit when facing foreclosure.

The rulings show the critical role that judges are beginning to play as foreclosures mount in the most severe housing crisis since the Great Depression. The recent decisions build upon widely circulated opinions issued last fall by federal judges in Ohio who found trusts that hold the mortgages regularly begin foreclosure proceedings before they obtain the legal right to do so.

Judges in states including New Jersey, Florida and Massachusetts have begun to dismiss many cases "without prejudice," meaning the plaintiffs can fix the defects and resume the process, but the ruling gives the homeowners more time. Meanwhile, some bankruptcy courts, where creditors may seek permission to foreclose if the debtor isn't keeping up with the bankruptcy plan, have issued standing orders requiring creditors to prove ownership of loans. Other state courts, including in Ohio and Pennsylvania, have begun requiring owners of loans who have filed foreclosure suits to try to negotiate settlements with borrowers to avoid foreclosure.

For more on this, see the WSJ Law Blog entry last evening, also by Mr. Efrati, headed "Subprime Legal: Judges Scrutinize Mortgage Docs, Deny Foreclosures."

Also cited, this July 14th National Law Journal article by Julie Kay, headed "Judges, attorneys work to stanch foreclosures: As actions surge, so do dismissals, mediation orders."

Posted by Marcia Oddi on July 26, 2008 12:33 PM
Posted to Courts in general