Zoeller petitions Indiana Supreme Court to set new requirements for lenders
INDIANAPOLIS – As the 50-state investigation continues into improper “robo-signing” foreclosure practices, Indiana Attorney General Greg Zoeller today filed a petition asking the Indiana Supreme Court to impose new procedures to ensure that borrowers’ legal rights are fully protected and mortgage lenders follow the law.
“When some mortgage lenders try to foreclose on distressed homeowners by filing foreclosure documents that are unverified, unauthenticated or riddled with errors, it not only violates the rights of the homeowners but it is also a fraud upon the court,” Zoeller said. “In Indiana, we are not going to wait for federal government action; we will forge ahead to craft our own solution.”
A foreclosure-prevention task force established by the Indiana Supreme Court developed a list of guidelines to provide assurances to lenders, servicers, courts and borrowers that state and federal laws are being followed for the protection of homeowners.
The Indiana Supreme Court’s task force included the Attorney General’s Office, judges, Supreme Court staff, legal services attorneys and private-practice attorneys for mortgage lenders. Zoeller’s office today filed in the Supreme Court a petition — called “Mortgage Foreclosure Best Practices” — that included all the task force proposed guidelines and added some wording to strengthen them.
The Supreme Court is likely to take the proposals under advisement and decide at a later date whether to adopt them as requirements that lenders and services would have to follow.
The proposed best practices developed by the task force would do the following:
• Require a mortgage lender seeking to foreclose to produce the original signed mortgage note when asked by the court – or other legal proof if the original cannot be located — and the chain of title proving that the lender has the right to enforce the note.
• Require that the court send a notice to the borrower of their legal right to a settlement conference with the lender; and require that the judge not take final action until the settlement-conference report has been filed with the court.
• Prohibit the mortgage lender from asking the borrower to waive his or her legal right to a settlement conference.
• Allow courts to impose monetary sanctions on lenders who fail to comply with the Best Practices. The petition notes that judges in Allen and St. Joseph counties have ordered sanctions of between $150 to $2,500 for similar violations.
Petition SC MortgageForeclosureBestPractices.fileSTAMPED.1.3.11
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