Foreclosure: Helping hand from the bench?

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As mortgage foreclosure filings rose in almost every county in Wisconsin last year, judges are evaluating whether or not they can take a more active role in addressing the problem.
A recent report from the Director of State Courts office revealed that foreclosure filings increased 21 percent from 2007 to 2008. It marked the second year in a row that filings jumped more than 20 percent in the state.

While some judges like William D. Dyke in Iowa County suggest they have the ability to request that parties engage in mediation prior to filing an action in court, others are wary that an increased role could be mistaken as advocacy.

“I’m sure there is some empathy amongst judges and we sympathize with those who are losing their homes,” said Adams County Circuit Court Judge Charles A. Pollex. “But any meaningful solutions might be beyond the scope of the circuit court.”

Adams County had an 80 percent increase in mortgage foreclosure filings from 123 in 2007 to 222 last year, the highest in the state.

But Dyke insists that encouraging mediation in foreclosure proceedings between a lender and borrower is just another tool judges can use to help combat the crisis and potentially reduce the number of filings.

“It’s quite possible that I could be characterized as an advocate here, but all I’m advocating for is use of the law that’s available,” Dyke said.

Foreclosure filings in Iowa County have increased from 58 in 2006, to 92 in 2007 and 105 in 2008.

Talking Points

As of Jan. 1, Dyke initiated a local rule in Iowa County which requires lenders who file a foreclosure action to notify defendants that mediation is an option within the state’s alternative dispute resolution statute.

But attorney Mark Richard Cummisford, who has represented creditors in foreclosures, said it is not practical for judges to mandate mediation in those kinds of cases.

“The statutes in my opinion are already fairly debtor-friendly compared to other states,” said Cummisford, who practices at Cummisford, Acevedo & Associates LLC, in Oak Creek.

“In my opinion, judges are limited in what they can demand out of a lender as far as asking them to mediate to modify a loan, or other types of loss mitigation alternatives,” Cummisford said.

In 2009, there has been only one instance in Iowa County where a lender’s attorney had to be contacted because the owner did not reply to the notice of foreclosure. But since the majority of foreclosure cases end with the owners “walking away,” according to Dyke, he said parties should at least know all their options before surrendering their home.

“The thing that has been frustrating is the reality that the homeowner would like to try and hold onto their home, but they have not been able to find anybody to talk to,” Dyke said.

In Vernon County, which had a 67 percent increase in filings from 2007 to 2008, Judge Michael J. Rosborough said that foreclosure cases are rarely contested, likely because owners do not understand the process or cannot afford legal counsel.

When someone does challenge a foreclosure, it is usually without an attorney, said Rosborough, and that can create a dilemma for the judge.

“One of the concerns we [judges] have talked about is that often times people don’t challenge foreclosures because, if put to the test, they might have a hard time proving out their case,” Rosborough said. “But nobody is putting them to the test because they can’t hire an attorney.”

No Contest

Like Pollex, Rosborough has yet to hear an approach to the problem that appropriately fits within the responsibilities of a judge and he also is wary of providing too much guidance.

“If we tell people there are some things they could be doing, but they don’t have the tools or ability to hire a lawyer, are we setting them up for failure and increasing their frustration by putting them in a position where they think you are their advocate?” Rosborough said.

At the same time, Vernon County could see a continued rise in foreclosures in 2009 after Viroqua manufacturing plant NCR closes by March 31, 2009, leaving 81 local residents jobless. Adams County is on pace for 208 foreclosure filings this year, according to Clerk of Court Dianna Helmrick, who has had eight filings through the first 20 days of 2009.

While the projected total is less than last year, it is still well ahead of 2007.

Helmrick said her staff was inundated with paperwork related to foreclosure filings last year, despite the fact that the majority were by default.

“If that changes and there are more full hearings, yeah, that would definitely take more time and create more congestion in the courts,” Helmrick said. “But that hasn’t happened so far.”

Dyke said the possibility that mediation or other methods of informing parties of their options in foreclosure may lead to more contested cases should be irrelevant when assessing the problem.

“People have said ‘We don’t need to be making more work for one another,’ but that’s not the point,” Dyke said. “The courts are designed to serve the people and I just think this is one good way for courts to accept a mantle of service for both sides.”