Last October, Ohio’s governor, Ted Strickland, and Attorney General Marc Dann, created a proposed “Compact to Help Ohioans Preserve Homeownership” and requested that the national mortgage servicers sign the compact.  The Mortgage Bankers Association of America (MBA), after requesting comments from its membership, submitted detailed comments regarding problems with the proposed compact, and the mortgage servicers did not sign the compact at that time. 

Various proposals and negotiations have transpired since that time, and on April 7, 2008, Governor Strickland announced that the following nine mortgage servicers have officially signed the compact:

• Carrington Mortgage Services
• Citi
• GMAC RESCAP/Homecomings Financial
• HSBC Finance Corp.
• Ocwen Financial Corp.
• Option One Mortgage
• Saxon Mortgage Services
• Select Portfolio Servicing
• Litton Loan Servicing

The six principles agreed to by the mortgage servicers include a willingness to:

• Engage in a substantial and large-scale loan modification effort for adjustable-rate-mortgage resets and subprime mortgages
• Identify, evaluate and make good faith attempts to contact at-risk or defaulting borrowers as soon as possible
• Modify loans to the extent permissible within existing fiduciary, contractual or other legal obligations and in accordance with prudent mortgage lending and servicing practices
• Create incentives for staff and foreclosure counsel to modify loans rather than foreclose
• Report progress to the Ohio Department of Commerce
• Enter into a non-binding agreement with the State for some defined period of time. (the agreements extend to June 30, 2009)

In an unrelated development, the Attorney General’s office is involved in an initiative to allow low- to moderate-income homeowners to be provided with a free lawyer to contest the foreclosure case or to work out a settlement with the lender.  The Attorney General, who had filed motions to dismiss forty foreclosure cases around the state based on technical reasons, was largely unsuccessful in those cases.

If you have any questions on this information, please contact Mr. Larry R. Rothenberg, Esq. Larry Rothenberg is the partner-in-charge of the Cleveland real estate and foreclosure department of Weltman, Weinberg & Reis Co., L.P.A. He is the author of the Ohio Jurisdictional Section contained within the treatise, “Dunaway, The Law of Distressed Real Estate”. The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan. Larry can be reached at (216) 685-1135 or via e-mail at lrothenberg@weltman.com.

Client Advisory is published by Weltman, Weinberg & Reis Co., L.P.A., an organization providing comprehensive creditor representation.  The information contained in this advisory is a summary of legal information and is not intended to constitute legal advice on specific matters or create an attorney-client relationship.  Contact any of our offices or visit our website at realestatedefaultgroup.com for more real estate related information, company facts and attorney profiles. (c)2008