Getting in middle of foreclosure fights

<p>John Knott had reason to celebrate Thursday.</p><p>Not only did he turn 65, but he walked out of Sonoma County Superior Court with new hope of avoiding the foreclosure that has dogged him for more than year.</p><p>Knott is the first participant in a court program aimed at settling the rash of lawsuits filed by people who are suing to fight foreclosure. </p><p>Instead of costly litigation, the court is trying to set the stage for a solution by calling both sides to an informal settlement conference prior to trial.</p><p>Superior Court Judge Elaine Rushing, who led development of the program in her role as supervising civil court judge, said judges were not erecting roadblocks to legitimate foreclosures. Rather, she said, banks are often as eager as homeowners to avoid a property seizure.</p><p>“If we can find a way that lenders' needs are satisfied and borrowers can stay in their homes, that is what we'd like to see,” she said.</p><p>How well the program works remains to be seen.</p><p>Attorney Richard Abbey, a longtime representative of local banks, said it was a noble idea that faced long odds of success.</p><p>Many mortgages have been aggregated and sold to investors, making it virtually impossible to get permission to modify loans, he said.</p><p>And the fundamental question of taking a house someone can't afford and making it into one they can afford doesn't have a simple remedy, especially so deep into the foreclosure process.</p><p>“It just ain't that easy to solve the substantial issues,” Abbey said.</p><p>But on Thursday, Knott left the program's first such conference, held before Superior Court Judge Mark Tansil, feeling he was on the road to a solution, even if it still remained out of grasp.</p><p>JPMorgan Chase did not modify the terms of the defaulted loan. But the bank's attorney did agree to a framework for subsequent discussions, a big difference from the way things have been, Knott said.</p><p>“It's exactly what I expected and hoped for,” he said.</p><p>For over a year, Knott said he has gotten nowhere in efforts to modify the $1 million loan that his mother took out against the house in 2007, a year before her death.</p><p>About $700,000 of the loan was used to pay a previous mortgage. Much of the balance was used for home care for his infirm mother in her final days, he said.</p><p>Knott and his brother struggled first to get the bank to recognize they had assumed responsibility for the loan after she died. The communication problems got worse as they looked for a modification to reduce the interest rate, which is over 7 percent.</p><p>JPMorgan Chase, which took over the loan when Washington Mutual went bankrupt, repeatedly lost the mountains of paperwork Knott sent over, he said.</p><p>“They have got more documentation than were needed for the Louisiana Purchase,” Knott said. </p><p>While Knott tried to negotiate with the bank, the threat of foreclosure never stopped. Since July 2009, the home that Knott helped build as a teenager was scheduled for auction nine times, only to have the sale averted at the last minute each time.</p><p>In July, he and his brother sued Chase and filed for a temporary restraining order to prevent the last of the scheduled auctions. That put them on the path to Thursday's conference.</p><p>A spokesman for JPMorgan Chase in San Francisco declined comment on the case, as did the bank's attorney as he left the courtroom.</p><p>But the conference apparently resulted in new interest in negotiating.</p><p>David Bush, Knott's attorney, said the judge's presence Thursday was a crucial change from earlier attempts at resolving the issue. The bank said it would come back with firm answers on modification by the next court date on Oct. 26, Bush said.</p><p>“The presence of a third party with authority really made the difference,” he said. </p><p>The next foreclosure settlement conference is scheduled for today. It also involves JPMorgan Chase.</p><p>You can reach Staff Writer Sam Scott at 521-5431 or sam.scott@pressdemocrat.com.</p>