Banks take no chances on city law

LYNN – After months of relative inactivity, the city?s foreclosure mediation ordinance is attracting attention from dozens of banks interested in complying with it, said a city lawyer, by reaching out to local residents facing potential foreclosure.Banks from across the country have sent “notices to cure” to homeowners who are behind a month or so on their mortgage payments. They are giving the owners 150 days to contact the bank and resolve payment difficulties.?I?ve probably got 200 in the last week. A day does not go by that I don?t get one,” said city Assistant Solicitor James Lamanna.Approved by the City Council last June over Mayor Judith Flanagan Kennedy?s objections, the mediation ordinance requires banks to reach out to property owners who are behind on their mortgages and give homeowners a chance to meet with a bank representative and work out a way to avoid losing their home.Massachusetts Dispute Resolution Services, a Salem- and Boston-based mediator, and the city will oversee the mediation process, under the ordinance, and Southern Essex Register of Deeds John L. O?Brien has stated he will not record foreclosure deeds filed by banks unless they are accompanied by the mediation certificate defined in the ordinance.The council has spent months fine-tuning the ordinance even as the number of local homeowners eligible for mediation climbed above 40 at the end of 2013. Councilors will meet as early as March 11 to approve the new changes, including one requiring the city to “hold harmless and defend” Dispute Resolution against legal action.City lawyers are almost certain the mediation ordinance will face legal challenges from banks. In a December letter to Kennedy, they warned a court battle over the city of Springfield?s mediation ordinance could affect Lynn.?Mass Bankers (Massachusetts Bankers Association) made it very clear they will ask the court to stop any mediations in Lynn until such time as the Supreme Judicial Court makes a decision,” Lamanna said.Although they may end up fighting the ordinance, Lamanna said banks are sending notices to cure in order to show a judge they followed the letter of the law on the ordinance even as they challenge its validity.?They can say, ?We did everything we were required to do,?” he said.Kennedy is also anticipating legal challenges to the ordinance. She vetoed the ordinance last year and the council overrode her veto.?I respect the boundaries between executive and the legislative branches, but I do expect it is going to cause us trouble,” she said.Lamanna said council action March 11 on the ordinance?s changes means mediation could begin in April.