Default Judgment

Cleveland's most rambunctious activists take on an unlikely target.

Gangs of New York
ESOP's Barbara Anderson: "We're not afraid to get in people's faces." - Walter  Novak
ESOP's Barbara Anderson: "We're not afraid to get in people's faces."
Stephen Bucha didn't know what he'd gotten into.

As head magistrate of Cuyahoga County's foreclosure department, Bucha is used to sorting out matters of missed payments and defaulted mortgages. The work is heavy on details, but seldom controversial: In at least 30 percent of the cases, Bucha estimates, homeowners never even respond to the lenders' complaint. Foreclosure granted. Case closed.

This was different. The East Side Organizing Project (ESOP) had invited Bucha to a "Foreclosure Forum" at its Miles Park Avenue headquarters. As guest of honor, Bucha thought he'd be treated as a visiting sage. Instead, he found himself under attack. It felt as if all 100 ESOP members were raging over homes lost to predatory lenders -- and blaming him, loudly, for failing to stop the carnage. Bucha tried to plead his case, but, he admits, "I got shouted down."

ESOP thrives on confrontation. "We're not afraid to get in people's faces," says leader Barbara Anderson. "And we don't back down."

And though Bucha and his fellow magistrates are used to laboring under minimal scrutiny, ESOP is changing that.

Cuyahoga County's five foreclosure magistrates handled nearly 10,000 cases this year. That's an increase of nearly 2,000 from 2001, which saw 2,000 more than the year before that.

ESOP charges that the system has become dependent on ignorance and passivity: Magistrates can maintain their enormous workload only because so many homeowners don't fight back. When they do, ESOP says, the magistrates don't have time to sort out the intricacies of their arguments. Few homeowners even get hearings before their houses are taken.

"The system is predicated on people not responding to the foreclosure notice," says ESOP's Christine Regula, who is currently fighting her mother's case. "They're just rubber-stamping everything that goes through that office: Foreclosure. Foreclosure. Foreclosure. All in favor of the mortgage company."

This year alone, about 1,000 homeowners filed for bankruptcy to keep their homes, according to court records. Another 3,000 were ordered for eviction, the property sent to a sheriff's sale.

Few if any got a day in court. Of the 3,000 owners who lost their homes this year, Bucha says 85 percent never even responded to the complaint against them. ESOP is convinced residents don't understand what's at stake or what to do about it. "People are not responding to these complaints," says Anderson. "Shouldn't our moral conscience make us want to know why?"

Even those who fight often find their cases closed quickly. Regula's lawyer thought she found a federal Truth-in-Lending violation on the original loan documents, which could have invalidated the mortgage. Regula can't believe the magistrate ruled against her -- without even a hearing. "I don't think they even looked at it," she gripes.

It's hard to believe volume isn't a factor. Last year, the five magistrates closed out 6,800 cases, which translates to nearly four cases a day each -- if they worked every day of the year.

Foreclosure trials, in fact, are rarer than sunshine during a Cleveland winter. Bucha insists they aren't hard to get, but he has a hard time naming the last one he held. He estimates that each magistrate held one trial this year. That's five trials -- in a year when 3,000 people will have been ordered from their homes.

Bucha argues that is because few issues are in dispute: People miss payments, they lose their homes. When homeowners have solid claims, banks want to settle, he notes. After all, they don't want to spend thousands of dollars in attorneys' fees on a $50,000 house.

Yet ESOP worries that people with complicated transactions -- particularly those involving predatory lenders -- get screwed. Sheila Ferguson tried to help her elderly uncle after a "scam artist" tricked him into signing away the deed, then took out a fat mortgage and defaulted on it, she says.

When Ferguson begged to fight the predators in court, her magistrate estimated it would take "5 to 10 years" to even get a date, she says. She opted for a settlement hearing and ended up paying $30,000 to buy back the house her uncle paid off years before.

Bucha isn't familiar with Ferguson's case, but says she must have misunderstood the magistrate. Then again, he admits, magistrates can do little about predatory practices. "The things most people identify as 'predatory' -- balloon payments, higher interest rate or fees -- none are illegal, and none are a defense in a foreclosure case."

Fraud is, but Bucha doesn't hear it raised in many cases. For that he blames lawyers, not his staff. "It's up to the attorneys to provide evidence of irregularities," he says. "That's where these people should focus their attention -- finding or training people to help victims of predatory lending."

Cleveland attorney Gary Cook is known for his aggressive defense of homeowners. He has no beef with the magistrates. "They've got a job to do," he says. "The onus is on the lawyers to come up with better ideas, better theories, more creative ways of advocacy, to better represent the people who have these problems."

Cook relies on huge discovery requests and voluminous multipoint complaints -- to the bane of his "silk-stocking" opponents. But while his clients love it, it's exactly what magistrates don't need. Thanks to the foreclosure explosion and no increase in staff, the department will have 3,000 cases backlogged by the end of the year, Bucha says. Common Pleas Presiding Judge Richard McMonagle agrees it's a problem, but he doesn't see a solution in tight economic times.

ESOP is calling for four changes: a 300 percent staff increase, a 180-day moratorium on new foreclosures, a predatory lending task force, and a flier that would accompany each new foreclosure to explain the system and possible legal remedies.

Everyone agrees extra staffing would be great, but no one has the money. And not a single official has seconded the moratorium call.

But the other two may generate more discussion. Everyone loves a task force. And Bucha would like ESOP to create a document explaining the process. He'd even be willing to distribute it from his office. "It could be that people don't realize how important a foreclosure complaint is," Bucha concedes.

Then again, he's not entirely convinced: "One reason we have such a low response rate may be that people realize they owe the money. They miss a payment, they've got to be expecting this." And that's a problem no amount of shouting can fix.

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