Remote court hearings could become a trend with foreclosure cases
Richard Allen appeared before an Allegheny County judge last week to ask for more time to save his Penn Hills home from foreclosure. His request was granted. It all happened on a cellphone call while he was sitting in his car in the parking lot at his job.
“This was better than going to the courtroom,” said Mr. Allen, 48, a security guard in the Strip District. “I didn’t have to take off work or go look for a place to park [ in] Downtown.”
The foreclosure prevention program run by the county’s court system known as Save Your Home has
been back in session since Aug. 11 with one notable change in the way hearings are being conducted: They are all handled remotely. Conciliation conferences between borrowers and lenders are done only by phone or video.
Larger numbers of people nationally are expected to have trouble paying their mortgages due to job losses caused by COVID- 19.
For now, foreclosures have been put on hold in many cases thanks to the CARES Act, which was passed by Congress in March.
This legislation allows mortgage borrowers to postpone making payments for up to 12 months on federally backed home loans if they have been impacted by the pandemic. The act also created a moratorium until the end of the year on any mortgages guaranteed by Fannie Mae and Freddie Mac, which also are federally backed loans.
While it’s still too early to predict the severity of future home losses, the danger of 12- month forbearances turning into foreclosure filings will increase if homeowners are still struggling when the forbearance periods expire.
Meanwhile, social distancing rules have led all courts in Allegheny County, which include civil, criminal and family courts, to move away from traditional cattle- call hearings where plaintiffs and defendants and officers of the court are packed in crowded courtrooms.
That has been true for the Save Your Home program, which traces its roots to the Great Recession of 2007- 2009 and its mortgage crisis, and it might be a good thing, observers say.
As of two weeks ago, people in Allegheny County like Mr. Allen who are in jeopardy of losing their homes to foreclosure have a system in place to remotely attend conferences with their mortgage lenders by using any communication device available, be it the latest iPhone or an old- fashioned landline.
Mr. Allen fell behind on the mortgage for his threebedroom, one- bathroom house due to marital problems. He was trying to get current on payments when the pandemic caused him to be laid off in March. He’s back to work now and playing catch- up, but thanks to the Save Your Home Program he will not lose his home as long as he keeps making progress.
He said calling in for his remote court date was a lot simpler than he expected, but there were some surprises.
“I had never done anything like this before,” he said. “I thought it would just be me on the line. I didn’t know I had to sit there and listen to other cases. But I learned a few things while doing that, and it only took about 30 minutes for my case to come up.
“If I have to deal with anything court- related again, I would not mind doing this at all.”
Other counties in the region have similar programs to prevent foreclosures.
Butler County’s program, called Credit Crunch, shut down for COVID- 19 in March but will resume in- person foreclosure conciliations in September. Beaver County’s foreclosure prevention conferences were held by telephone from March to July and went back to in- person conferences in August. Lawrence County foreclosure conferences, held once a month, were resumed in person in June.
“Butler, Beaver and Lawrence counties do not have the volume of cases that Allegheny County has, so there are significantly fewer people attending in- person conferences,” said Suzanne Ruschak, a partner at the Downtown law firm Pavlovich & Ruschak.
Her firm represents lending institutions in foreclosure cases in several surrounding counties.
“In Washington County, if the borrowers call a hotline and attend a counseling session, they can obtain a 90day stay in the foreclosure proceedings to give them time to negotiate with the lender and find a way to avoid foreclosure,” Ms. Ruschak said.
None of the other counties around Pittsburgh have a system to hold remote hearings as Allegheny County does.
Going remote
The COVID- 19 pandemic has been a catalyst for change for court systems across the country.
“I think remote court in some fashion is on the horizon,” said Judge John McVay Jr., of the Allegheny County Court of Common Pleas Civil Division.
Judge McVay presides over the Save Your Home program.
“We would have had an overcrowded courtroom with these case numbers today, and we need to do things differently to protect people,” he said.
The cases heard one day last week were a clear indication that the COVID- 19 crisis has taken a toll on homeowners who had already been facing financial trouble even before the shutdowns hit in March.
Pandemic- driven job losses were a big factor in the cases that came up.
Important documents for modifying loans also fell through the cracks at a higher rate than usual. Bank officers as well as delinquent borrowers claimed they hadn’t received paperwork mailed during the shutdown due to office closures and people quarantined at home for months at a time.
Several cases were protected by moratoriums on federally backed mortgages set by the CARES Act and mortgages guaranteed by Fannie Mae and Freddie Mac on the secondary market. The lenders had already suspended requirements for payments on the loans. Because of those restrictions, Judge McVay didn’t need to use his authority to stop some financial institutions from foreclosing.
That’s something that he has been doing for a long time in the Save Your Home program.
“The real power of the program is I can stop the foreclosure while we explore alternative ways to try to save homes,” the judge said. “I’m looking for any possible change in circumstances that gives me hope that the home can be saved, such as the person reclaiming an old job or finding a new one.”
Most cases are pretty cut and dried. Either the homeowner can afford the house or not. If a person clearly cannot afford a home and there is little hope of their financial condition improving, the court has no choice but to allow the lending institution to foreclose.
But some cases are more complicated than others.
Lynn Cibula, 54, of Munhall, has had a case lingering in the Save Your Home program since 2018.
Ms. Cibula moved back to Pittsburgh from Arizona in 2008 to take care of her mother. Her mother died in 2016 with a $ 50,000 mortgage and no will. Ms. Cibula has since been able to transfer the deed to the house in her name, but she’s still struggling to find a bank that will give her a mortgage.
“The judge continued my case all this time because he saw progress,” said Ms. Cibula, who works in the medical field.
“The process is working,” she said. “I finally got the property titled in my name, and, now that I’ve established a better work history, more funding is available to me.”
‘ Two cans and piece of string’
The Save Your Home program, which is a specialty court within the Civil Court Division, was established through an administrative order in January 2009 by Allegheny County’s president judge, Joseph James. The Great Recession had hit, and an alarming number of foreclosures stemming from the mortgage crisis sparked the effort by several government agencies, including the Allegheny County Sheriff’s Office.
Judge McVay estimates that the program has saved at least 100 homes per year since it started.
Dan Sullivan, a housing counselor with the Downtownbased nonprofit agency Action Housing Inc., said he is impressed with how well the Save Your Home foreclosure cases are going in the online- only system.
“You have everything from people using two cans and piece of string to the latest smartphones and everything in between,” Mr. Sullivan said. “That’s hard to coordinate, and the courts are doing a really good job of that.”
Ms. Ruschak, the partner at Pavlovich & Ruschak, calls the remote conference process surprisingly efficient. For most borrowers, this is the first time they have had reason to attend court, and she believes the in- person courtroom experience is bound to be more intimidating.
It also reduces the need to take a day off from work or arrange child care, she said, and may free borrowers who are elderly or infirm from the stress of traveling for in- person appearance.
Remote court is an innovation born out of necessity, Judge McVay said, but it might stay in place for the long haul.
“We as a court are prioritizing the public safety, but simultaneously serving the public constitutionally by holding court,” he said. “I believe we’ll see an increase in foreclosure cases once the moratoriums on foreclosures is lifted and people’s financial situations start coming to light.”