Judges still hold keys to foreclosed properties

LYNN – A federal judge ruled last week that foreclosure mediation programs in Lynn and Worcester can continue, rejecting a request from seven banks, including Eastern Bank, that the program be stopped.But the judge also deferred several questions about the ordinance’s legality to a higher court.”We’re very pleased that Judge (David) Hennessy rejected the request for an injunction; it’s appropriate to allow this mediation program that is working to continue to help homeowners,” said Eloise Lawrence, a staff attorney at the Harvard Legal Aid Bureau who has been helping locals affected by foreclosure. “We will learn more once the Supreme Judicial Court (SJC) rules in the Springfield case about specific state law requirements, but we believe these ordinances are constitutional and will withstand scrutiny.”Approved in 2013, the city’s 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. The ordinance also requires that all non-local banks post a $10,000 bond on any home that goes into foreclosure to ensure the property is maintained.Some banks have protested the ordinance. Eastern Bank has argued that the ordinance is shortsighted, previously telling The Item that lenders will leave Massachusetts if each municipality is allowed to create its own lending laws, thereby making mortgages more difficult to obtain.Seven banks, including Eastern, filed a lawsuit against the City of Lynn and City of Worcester in late June, asking the U.S. District Court in Worcester to declare the foreclosure ordinance in Lynn, and a similar ordinance in Worcester, invalid and unconstitutional.Eastern Bank spokesman Andrew Ravens previously told The Item that the action against the city was “simply to request the court delay the implementation of Lynn’s ordinance until the constitutionality of these types of laws can be determined by the Federal District Court.”Attorney Brian Jerome of Massachusetts Dispute Resolution Services, the mediation group meeting with homeowners and lenders, said his group has had “early success” since beginning mediations in April 2014.He said the group has successfully mediated six or seven cases in which the lender has agreed to a payment plan or loan modification and the resident has been able to stay in the home.Jerome said the group is currently in the process of mediating 85 to 90 cases, and he estimated that the majority of the city homeowners whose homes are in foreclosure have agreed to participate in the mediation process. (The ordinance requires the mediators be notified when residential homes with up to four units and a resident mortgage holder start the foreclosure process.)Most importantly, Jerome said that the mediation group has 31 banks, including “all of the major banks,” who have agreed to participate in the program.”We’ve had to spend a great deal of time educating both homeowners and banks of our procedures and our programs, and it’s taken quite a while to get lenders – particularly the bigger banks – to opt in and participate in the program,” Jerome said.He said that Eastern Bank has one case in which the mediators are involved – none of the other plaintiffs in the lawsuit have any cases involved in the mediation program.The federal district court refused to stop the ordinance. But Hennessy did not rule on the constitutionality of the law, deferring to the Massachusetts Supreme Judicial Court (SJC), which is reviewing a Springfield foreclosure ordinance that is similar to the Worcester and Lynn ordinances.Supporters of the local ordinance nevertheless celebrated the ruling.”No matter what happens in court in the future, we’ll continue to use every available tool to help Lynn families fight foreclosure and displacement,” Isaac Hodes, of Lynn United for Change, a local anti-foreclosure group, said. “But this ruling gives us hope that the mediation progra