Clarification on the role of the mortgage servicer, the court and the impact of judgment in District of Columbia foreclosure cases

I am still hearing borrowers say “I was just going to wait until the next court date to….”   I want to make very clear that NO ONE should be “waiting for the next court date” to make a decision about how to proceed with whatever it is that you want to do with your property. As discussed below, the court does not make decisions for Plaintiff about how Plaintiff can proceed other than to award Plaintiff judgment after Plaintiff files its motion for judgment (Motion for Summary Judgment, Motion for Judgment on the Pleadings, etc).  There should be no waiting to pull the trigger on a decision in this process….you should be acting immediately at all times. If you want to apply for HAF, loss mitigation, schedule an appointment (via email preferably) with your housing counselor and get the complete application in now. If you want to sell, get it listed now. If you don’t know what info your servicer still needs or if your application is complete, call the servicer now.  If you want to file for bankruptcy, consult with a bankruptcy attorney now. If you don’t know what to do, ask me now.  This process can only work if you do the work!

STEP 1 – MAGISTRATE JUDGE 

In DC, most lenders are opting to pursue foreclosure via judicial means.  Plaintiff comes to court, files the complaint and the case is started.  The homeowner/borrower is a named defendant. Because the court acknowledges that borrowers need a final attempt to pursue loss mitigation to sale, the court allows borrowers to appear before the Magistrate Judge to participate in a loss mitigation submission and mediation.  

Servicer’s role:  The servicer receives the loss mitigation package, reconciles the borrower’s financials with the investor guidelines and decides whether to make a home retention offer to the borrower.  The servicer is the sole party responsible for reviewing and deciding about loss mitigation options.  Plaintiff’s counsel is not involved in this process other than to pass along any documents received from the borrower to the servicer.  

Court’s role:  The court only has the authority to manage the case and court events. The court is not involved in the loss mitigation process and cannot dictate to the Plaintiff or servicer what to offer to the borrower.  If there is a problem with the review or the servicer’s conduct, that can be brought to the court’s attention but only to ensure that the case does not move forward inappropriately.  All claims or issues that you wish the court to make a ruling on MUST be included in a written motion (or Counterclaim) that has been filed with the court. The court has very limited authority to grant oral requests.

Once the loss mitigation attempt has been exhausted (and/or no offer made by the servicer), the case is done with the Magistrate Judge portion and will be assigned to either the trial track or judgment calendar.  Borrowers can raise any defenses (in their Answer) or affirmative claims (in their Counterclaim) that may be available, but the underlying lawsuit is solely about the mortgage default. 

STEP 2A – TRIAL TRACK
If a borrower has raised defenses or affirmative claims that need to be heard by a judge at trial, the case will be assigned to a trial track (usually Track 2).  Borrowers will get a copy of a scheduling order that day that will outline the upcoming deadlines for the case that prepare you for trial. NOTE:  Many borrowers think that trial is automatic if you are on the trial track….this is incorrect. You have to survive the dispositive motion (Motion for Summary Judgment, Motion for Judgment on the Pleadings, etc) in order to get to trial. If the judge grants the dispositive motion and judgment is awarded, there is no trial and the substantive litigation ends and the next step is that Plaintiff will advertise and schedule a sale date.  If the judge denies the dispositive motion, then the next step is pre-trial conference and trial.  

Servicer’s role:  Before and after judgment is awarded, you are still able to submit another loss mitigation but it is up to the servicer to review prior to the sale. The mere submission of a loss mitigation package before or after judgment has been entered does NOT in and of itself stop the entry to judgment or the scheduling of the sale.  This is why it is imperative to remain in direct, regular contact with the servicer to confirm that your loss mitigation package is complete and see if they will agree to stop the sale (if judgment has been entered).  

Court’s role:  The court only has the authority to manage the case and court events. When you appear before the judge, if a motion has been filed and it is ready for ruling (meaning more than 14 days have transpired since it was filed), the judge will rule on the motion. If the motion is denied, the case moves forward to trial. If the motion is granted, the substantive litigation ends and Plaintiff has judgment and is permitted to schedule a sale date. Once the motion is granted and judgment is entered, there is nothing further for the court to do until the sale has occurred and the Plaintiff has filed its Motion to Ratify the Sale.  Once judgment is entered, the judge does not have the authority to stay the sale unless the borrower files an injunctive motion. 

OR

STEP 2B – JUDGMENT CALENDAR
If there are no defenses or affirmative claims raised, the case will be assigned to the judgment calendar.  In a judicial foreclosure, the Plaintiff cannot set a sale until it has judgment and the Plaintiff cannot get judgment until it files a motion (Motion for Summary Judgment, Motion for Judgment on the Pleadings, etc). Once you are assigned to the judgment calendar, you are basically waiting for the Plaintiff to file its motion (while you are pursuing the final options).  Once the judge grants the motion and judgment is awarded, the next step is for Plaintiff to start advertising and set the foreclosure sale.

Servicer’s role:  Before and after judgment is awarded, you are still able to submit another loss mitigation but it is up to the servicer to review prior to the sale. The mere submission of a loss mitigation package before or after judgment has been entered does NOT in and of itself stop the entry to judgment or the scheduling of the sale.  This is why it is imperative to remain in direct, regular contact with the servicer to confirm that your loss mitigation package is complete and see if they will agree to stop the sale (if judgment has been entered).  

Court’s role:  The court only has the authority to manage the case and court events. When you appear before the judge, if a motion has been filed and it is ready for ruling (meaning more than 14 days has transpired since it was filed), the judge has the discretion to grant the motion and enter judgment.  If you are under review (and Plaintiff’s counsel confirms that you are under review), the judge may hold off on ruling until the next status hearing or she could grant the motion and stay enforcement until some identified date. She could also grant the motion.  Once the motion is granted and judgment is entered, there is nothing further for the court to do until the sale has occurred and the Plaintiff has filed its Motion to Ratify the Sale.  Once judgment is entered, the judge does not have the authority to stay the sale unless the borrower files an injunctive motion. 

Feel free to schedule a phone consult with me!