Lynn banks on SJC foreclosure decision

LYNN – City Councilor Peter Capano said he “is definitely disappointed” by a state high court ruling against a city of Springfield foreclosure ordinance closely paralleling the local ordinance Capano drafted for Lynn.”With all of the pieces finally together, I would hate to see it fall apart,” Capano said.The Supreme Judicial Court ruled that state foreclosure laws pre-empt Springfield’s foreclosure ordinance and singled out for criticism a part of the city ordinance similar to a requirement in Lynn’s foreclosure law.”The ordinance by its own terms does not allow a mortgage to proceed with foreclosure before obtaining a certificate of good faith mediation, a direct impingement on the process of foreclosure,” the SJC ruling stated.The Lynn ordinance is not mentioned in the state court ruling, but Lynn and the city of Worcester face challenges by seven banks – including Eastern Bank – in federal court with the banks seeking to have the local ordinances declared invalid and unconstitutional.Capano and mediation advocate Isaac Hodes of Lynn United for Change said the SJC ruling should compel mediation supporters – once a federal judge schedules a hearing on the banks’ request – to argue that Lynn’s ordinance is working.”Our program is up and running – I don’t know if that makes a difference,” Capano said.Passed by the City Council in 2013 over Mayor Judith Flanagan Kennedy’s objections, the Lynn ordinance requires homeowners and mortgage holder representatives to sit down and try to resolve overdue and delinquent mortgage payments before the holder forecloses.If mediation is unsuccessful, the bank can proceed with foreclosure, but a certificate of mediation is issued and Southern Essex Register of Deeds John L. O’Brien Jr. said he will not file foreclosure deeds if he does not receive certificates from banks.Hodes said Massachusetts Dispute Resolution Services, the organization the city picked to handle mediations, has heard 35 cases to date this year.”The program prevented foreclosure in every one,” Hodes said.But Tani Saperstein, the Springfield attorney representing six banks in the case against the city, said the Lynn foreclosure ordinance is “substantially similar” to Springfield’s.The SJC clearly ruled state law overrules local authority concerning foreclosures.”The Legislature’s amendment of the foreclosure statute in 2012 provides further support for our conclusion that the foreclosure process is wholly a matter of (S)tate regulation absent an expression of a clear intent to allow local regulation,” the court stated.Massachusetts Bankers Association spokesman John Skarin thinks the SJC ruling will be on the mind of any federal judge reviewing bank arguments against the Lynn ordinance.”I can’t see why it won’t have an effect. Our expectation is that they would take that decision under strong advisement,” Skarin said.Bank representatives said the SJC ruling underscores their consistent objections to local foreclosure laws, calling them – in Eastern Bank spokesman Andrew Raven’s words – “a patchwork quilt of hundreds of different foreclosure procedures?”Skarin said the group’s 175 member banks do business in two or more communities.”Doing business in multiple jurisdictions with multiple rules is difficult,” he said.Kennedy on Monday said she has not read the SJC ruling, adding, “I am not at all surprised by the outcome.”