County trying to help homeowners
Homeowners in Sandoval County are more likely to face foreclosure than anyplace else in the state, a trend some court officials have found troubling.
Sandoval posted the highest foreclosure rate in the state during the third quarter of this year, with one in every 105 housing units receiving a foreclosure filing, according to RealtyTrac, based in Irvine, Calif. The county has generally maintained the highest foreclosure rate in New Mexico since 2008.
For comparison, one in every 269 housing units statewide received a foreclosure filing during the recent third quarter, the 29th-highest state foreclosure rate in the nation.
Recognizing the foreclosure problem in mid-2009, the judges and staff in Sandoval County District Court looked at ways to help homeowners know what options and resources are available to them.
“We knew we needed to do something,” said Geoff Nims, staff attorney with the state’s 13th Judicial District, which includes Sandoval. “Once people walk in the door, you can work with them. The trick is getting them in the door.”
In New Mexico, the first step in the foreclosure process is for the lender to file a complaint in county district court against a homeowner behind on mortgage payments. The next step typically comes a minimum of 30 days later when the lender requests either a default or summary judgment against the homeowner.
The process tends to steamroll cash-strapped homeowners unable to hire an attorney.
Sandoval County District Court’s response in November 2009 was to start holding a mass “status conference” once a month on all foreclosure complaints filed from 60 to 90 days earlier.
“We don’t take requests for judgments until two weeks after the status conference,” said Chief Judge Louis P. McDonald.
Commonly used in cases of all types, status conferences bring all parties together for an update of the case with the judge. With Sandoval’s once-a-month foreclosure docket, the conferences take a different twist.
“All parties must appear, although it’s more informational for the homeowner,” said Crystal Hyer, another staff attorney with the 13th District. “We try to give them everything they need.”
Lawyers with Albuquerque-based United South Broadway Corp. are on hand to provide legal advice and sometimes accept pro bono cases.
“We want to give the homeowners the sense they have a voice on their side and that they have some remedies in the foreclosure action,” said USB lawyer Angelica Anaya Allen.
A key component of the status conference is the presence of lawyers for the lenders that initiated the foreclosure actions in the first place. Homeowners have a rare opportunity to discuss their foreclosure cases face-to-face with the lawyers.
“For some people, it makes them feel better. It helps them to know where they’re going and what their rights are,” McDonald said about the conferences. “The outcome may be the same.”
Perplexed and frustrated
Earlier this month, the foreclosure docket drew roughly 55 people involved in 30 of the 76 complaints that had been filed in August. The small crowd was subdued, filling most of the courtroom’s pew seating.
“Most are just perplexed,” Hyer said. “Twenty percent who arrive are shaking, literally on the verge of tears and clutching their complaint. The whole process is beyond them.”
Some are just frustrated.
“They’ve tried to educate themselves” on the process, she said. “They’ve applied for a loan modification and talked to the lender but maybe haven’t gotten anywhere.”
McDonald opened the November status conference with a brief, informal overview of the foreclosure process and introductions of the various professionals in attendance: court staff, lawyers for the lenders and United South Broadway, a specialist in short sales. After conducting a roll call, McDonald excused himself from the courtroom.
One pew at a time, the homeowners lined up and waited their turn to go over their cases with Hyer, Nims and other court staffers pitching in to help. Conversations picked up and the status conference took on the ambiance of a trade fair.
“This is controlled chaos,” said the court’s executive officer, Greg Ireland, as he watched from the jury box. “The court must remain neutral. We’re just orienting them to the resources available.”
As homeowners stepped up to their tables, the court staffers asked whether they had applied for a home loan modification, providing guidance on what to do if they hadn’t. Modifications, where one or more terms of the original home loan are changed, are frequently the only way that homeowners can stay in their houses.
Staffers also went over the critical step of writing and filing an answer to the lender’s original foreclosure complaint. Failure to file a formal answer means the homeowner is conceding defeat in the foreclosure case. Homeowners who wanted mediation were told how to fill out the appropriate form.
Putting their heads in the sand
On average, more than half of the homeowners facing foreclosure in Sandoval County are no-shows for the monthly status conference.
“They have their head in the sand,” said Peter Veres, a certified distressed property expert who has been attending the conferences for four months to explain the option of a short sale — selling a home for less than the outstanding loan amount — to owners facing foreclosure.
No-shows are frequently homeowners in some sort of denial about the foreclosure, rather than people who are simply walking away from their house, he said. But ignoring the foreclosure complaint won’t make it go away.
“You’ve got to be engaged in the court process,” Anaya Allen said.
Even if a homeowner is making progress in reaching a loan modification agreement with the lender, it’s a bad idea to ignore the foreclosure complaint, she said.
A lender’s litigation department may forge ahead with a repossession and sale in court while the loss mitigation department may forge ahead with a loan modification, she said. Ultimately, however, loss of ownership through foreclosure trumps a pending loan modification.
“Once the house is sold, it’s over,” she said.