SIDEBAR Summer 2017 - 14

MONTGOMERYBAR.ORG

SIDEBAR FEATURE

UPDATE ON THE MONTGOMERY
COUNTY MORTGAGE FORECLOSURE
DIVERSION PROGRAM
By The Honorable Richard P. Haaz

BACKGROUND
Former President Judge William J. Furber, Jr. approved a
Montgomery County pilot mortgage foreclosure diversionary
program which included mortgage foreclosure actions filed after
June 1, 2015 involving owner-occupied residential properties with
mortgages under $300,000. Commercial properties and those
which are the subject of divorce litigation, estates or bankruptcy
proceedings are not included in the program.
Initially, Judge Carolyn T. Carluccio and I presided over
"mortgage court" every other Wednesday to supervise non-record
conciliation conferences to facilitate resolutions between the
lenders and delinquent borrowers.1 Housing counselors were
available free of charge to help facilitate document exchanges,
communications and resolutions.
I wrote an article for the MBA Sidebar (Winter 2015-16)
to share the results after the initial six months of the program.
Approximately 12% of the cases in the program resulted in nonjudicial resolutions at that time. The early statistics also projected
that this program would dispose of 130 cases per year, benefitting
lenders, borrowers and the court system.

EVOLUTION OF THE PROGRAM
As initially projected, Judge Carluccio and I transitioned the
program to master-supervised conferences after the first year.
Alfred Abel, Esquire; Rochelle N. Bobman, Esquire; Samantha
A. Fagnan, Esquire; Mark S. Harris, Esquire; Bernadette A.
Kearney, Esquire; and Pamela M. Tobin, Esquire, preside as
volunteer masters over this program which now is scheduled
every other Friday. The orders scheduling the conferences and the
recommended orders completed by the masters are submitted to
the presiding judge for signature.

UPDATED RESULTS
Mortgage foreclosure complaints filed from
June 1, 2015 through December 31, 2016:

2,368

Cases eligible for the program:

1,667

Cases settled from June 1, 2015 through
December 31, 2016:

363

Ratio of settled cases to all cases in
the program:

23.16%

The results of the program exceeded expectations. The
initial "look back" analysis after six months yielded a 12%
resolution rate. The non-judicial disposition rate has jumped to
23.16%. The initial projection of 130 non-judicial dispositions
per year was too modest. The program averaged 240 nonjudicial dispositions per year. With very little expenditure of
judicial resources, our court system has benefited by disposing
of 240 cases annually without any need to schedule, hear or
preside over any preliminary objections, discovery motions,
motions for summary judgment or trials. The lenders have
benefited by entering into agreed-upon modifications, allowing
non-performing loans to become performing loans in order to
avoid eventual bank ownership of distressed properties. The
homeowners have benefited by saving the family home with
new terms that are feasible for their circumstances. The general
community (and court system) has benefited by saving 240
families per year from the life-altering experience of a forced
eviction and related stressful sequelae leading to family court or
law enforcement involvement.
We wish to give special thanks to my former courtroom
clerk, Nancy Grisafi, my former law clerk, Samantha A. Fagan,
Esquire, and Rose Ashton from Clarifi who tirelessly prepare
the cases for the conferences and assist the masters who preside
over the conferences. The volunteer masters, Nancy, the lenders
and Rose are all to be congratulated for making this program
successful and helping our community.

Non-foreclosure dispositions include loan modifications, trial modifications, repayment schedules, approved short
sales, deeds in lieu of foreclosure or payment of the balance.

14 SIDEBAR

Table of Contents for the Digital Edition of SIDEBAR Summer 2017