Perhaps it was always a longshot that JP Morgan Chase CEO Jamie Dimon would be subpoenaed to Rhode Island to negotiate in court-ordered foreclosure mediation cases.
But one year ago, mediation program Special Master Merrill Sherman said she would consider calling Dimon to Rhode Island if it was the only way to guarantee decision-making authority on the lenders side of the table.
Twelve months later, the landscape surrounding the hundreds of lawsuits brought against lenders for allegedly improper foreclosures has changed, as has the mediation program itself.
Last summer, just as the glacial pace of negotiations had begun to quicken, the U.S. First Circuit Court of Appeals (in an opinion by former Supreme Court Justice David H. Souter) ruled that an order freezing foreclosures in pending cases had been improper and would have to be changed.
After ending the blanket foreclosure injunction in September, U.S. District Court Judge John J. McConnell Jr. in December wrote new rules for Sherman’s mediation program, streamlining it and putting a limit on the time cases can bounce around in it.
The result has been a rapid increase in the pace of settlements between lenders and homeowners, including loan modifications and “cash-for-keys.”
At the end of the first week of January, 568 cases on the special master’s docket had been disposed of, compared with just 58 cases at the end of 2012, according to a report filed with the court in January.
“The cases are moving and seem to be settling at an accelerated rate,” Sherman, a former president of Bank Rhode Island, said in a recent phone interview. “Some of this is because many, if not most, of the [lenders] are willing to consider loan modifications. That has helped everyone in pre-foreclose. Post-foreclosure it is more difficult and defendant-specific. Some will consider settlements and some will not.”
Sherman said defendants have become better at dealing with foreclosure cases but it would be “less than candid” to suggest the end of the foreclosure injunction hadn’t contributed to the faster settlements on the plaintiff end. Becoming more familiar with the system had also helped her office speed things along, she said.
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