The Foreclosure Report

Ohio Defaults Head To Federal Court

The Plain Dealer reports from Ohio. "Lawyers who do not want to wait for their foreclosure cases to wend through a swamped Cuyahoga County Common Pleas Court have jumped to an express lane in federal court. Seizing on a long-established but previously little-used option, lawyers have filed more than 350 foreclosures this year in U.S. District Court, up from eight in 2003."

"Now, all the lawyers have to do is direct prospective buyers of confiscated homes to sales that have attracted no interest."

"For a foreclosure to get into federal court, the debt must total at least $75,000 and the parties must be from at least two different states. In the modern mortgage market, out-of-state lenders are common. Most of the foreclosures are uncontested and sail through in three to six months, which is important to lawyers who are graded by lenders according to speed."

"'It is an attempt to find creative solutions on our part,' lawyer Kevin Williams said. 'We're just trying to do a good job for clients.'"

"The federal court can move faster because its foreclosure volume is much lighter than the county's backlog, which totaled 11,398 as of Oct. 6, according to the CSU study. The federal court also requires that all cases, motions and other documents be filed electronically, eliminating paper work. The federal court charges $350 to file a foreclosure; the county court fee is $475."

"While some foreclosure lawyers have found their way to federal court, buyers looking for bargain-priced homes have yet to follow. County foreclosure sales fill the Justice Center auditorium on Monday mornings. But auctions held at 12:30 p.m. the same day at the nearby federal courthouse draw only attorneys who reclaim property for mortgage holders."

"At the federal auction last week, eight properties sold in 15 minutes. In each case, the only bidder was Cleveland lawyer Cliff Babcock, standing in for Manley Deas Kochalski. He faced no competition for property in Cleveland, Bedford, Maple Heights, Oakwood and Warrensville Heights."

"Lenders' lawyers bid about the minimum, two-thirds of appraised value, but no money changes hands because the companies would be paying themselves. The lawyers would love to be outbid. 'It's an opportunity,' said Mark Dottore, one of 18 'master commissioners' who auction land for the court after having it appraised.'"

posted by Ben Jones @ 7:36 AM