By Roy Strom
On the Daley Center's 28th floor, hundreds of Chicago homeowners appear before one of the 10 Cook County foreclosure judges each week.
In the hall outside of courtrooms on a Friday in June, attorney Chris Haddad may help about 80 of these homeowners. Some of them, she said, can become nervous and overwhelmed with a legal process they fear will result in losing their home.
Haddad spends two or three days a week at the Chicago Legal Clinic (CLC) foreclosure advice desk as a CLC staff attorney.
Apart from completing applications to save clients a $206 court fee and beginning to fill out their motions to delay foreclosure, Haddad said she handles the emotion and confusion that sometimes comes with appearing in court for the first time.
During a recent meeting, she circled upcoming court dates and explained, "A motion is just a fancy word for a request."
She also described mediation as a negotiation process to lower monthly mortgage payments for those in financial need.
"This is what is going to save your home," she told one person.
Many times, lawyers like Haddad become the first attorney a client facing foreclosure will meet. But as homeowners navigate through what may be a two-year process to save their homes, they likely will consult a host of other attorneys, many of whom volunteer their services on a pro bono basis.
Pro bono lawyers serve a vital role in Chicago's foreclosure process, starting from the time a homeowner receives a foreclosure notice. But because of the huge need and a complex process that some lawyers say involves much wasted time, the demand for pro bono lawyers continues to outpace the supply.
After Haddad sees a client, she refers the person to the 13th floor CLC Chancery Advice Desk, where staff or pro bono attorneys complete the rest of the applications for mediation or requests to stay a foreclosure.
After clients apply and get accepted into mediation, Chicago Volunteer Legal Services (CVLS) assigns one of its 400 mediation-trained volunteer lawyers to the person's case. These attorneys also litigate some cases. Center for Conflict Resolution volunteers, who get trained as mediators, sit at the table with those CVLS attorneys.
The countless pro bono attorneys dotting the path to resolving a foreclosure prove vital to a client's chances of staying in their home, said attorney Mike Karnuth, who volunteers to handle mediation cases for CVLS.
"I think (homeowners) would be confused and frustrated by the process" without representation from a pro bono attorney, he said.
Thirty-eight percent of these mediation cases result in a client keeping their home, says the Cook County Circuit Court's Chancery Division Mortgage Foreclosure Mediation Program June 27 report.
About half of the mediation cases result in a settlement, which can range from a reduced mortgage payment to a "dignified exit," a short sale or, better — handing the house back to the bank with the outstanding mortgage balance forgiven.
In 2005, Cook County saw 16,494 foreclosure filings, the June 27 report says. From 2008 to 2011, that number never came in below 40,000. In 2010 alone the county saw 50,621.
While CVLS manages to assign a pro bono attorney to each qualified client, the amount of foreclosures overwhelms the program, said Margaret Benson, executive director of CVLS. Benson and others said the need for pro bono attorneys remains huge with foreclosures showing no sign of slowing in Chicago.
And, a shortage of volunteers to help these people can lead to a half-a-year delay in scheduling mediation, Benson said. That means, many lawyers said, that missed payments add up and result in higher monthly payments and continued foreclosure problems for homeowners.
'I was going to lose my home'
Marjorie Pandy, a 62-year-old native of Belize, found her Chicago South Side home she lives in with Calvert, her 66-year-old husband, underwater when the real estate market collapsed in 2009.
She refinanced her mortgage, planning to move before the market declined, she said. But with her house suddenly worth far less than her mortgage cost, she said she couldn't find a buyer.
Kathleen Robson (left), a pro bono foreclosure defense lawyer, helped save Marjorie Pandy's home by striking a deal to reduce her monthly mortgage payment. Robson represents one of the about 400 attorneys trained by Chicago Volunteer Legal Services to handle the mediation process, which saw 4,072 cases since it began in 2010.
Photos by Lisa Predko.
Her mortgage payment cost $1,107 a month after she refinanced and she only brought in about $900 a month from disability checks. She said she called her lender and asked if it would accept a payment of $700 a month.
She and her husband planned on living off the remaining $200 a month from her disability checks plus the small income her husband makes from Social Security.
"I would be with no gas and no lights, but I would still have the home," Pandy said. "They said if I can't give them the $1,100, then they're not going to take anything."
She soon received a foreclosure notice, but resolved to find a way to stay in her home near the Back of the Yards neighborhood.
"I was going to save my home, because, hey, I didn't want to lose it," Pandy said. "I had enough invested in it and so every time they said, 'You have to show up in court.' I did."
During her first court appearance, the judge directed her to the CLC table outside the court, she said. There, she got help figuring out what papers to complete and what deadlines she faced. She then went to the 13th floor Chancery Advice Desk.
Kathleen Robson, a volunteer CVLS attorney who has worked on at least 50 mediation cases, began representing her. After Robson took her case, Pandy said she never again showed up in court alone.
She said she listened to everything Robson told her. When court dates came up, she made sure to be in court. When Robson needed any mortgage documents or her financial statements, Pandy got them to her.
"You have to go through all the steps," Pandy said. "You have to follow what they tell you to do."
Following all the steps can take a long time, though. Court statistics say it takes nine months from being ordered to mediation before the first session occurs.
In Pandy's case, the mediation took about a year of back and forth with the bank and lender before she received a modified payment, she said.
She now pays $559 a month on her mortgage, she said.
Without Robson's help, Pandy said, "I was going to lose my home, no doubt about it."
"I was trying to save my home, but it wasn't easy. You have to have money to fax these things. You have to get to court. But in the end it was worth it. And I couldn't have done it without Kathleen. And if I had to pay her, I couldn't have done it either."
Dealing with the issue
Some homeowners facing foreclosure don't share Pandy's resolve; they feel like no options exist, Robson said.
"It's overwhelming and they're scared," she said. "And I think there's a little bit of a component of denial."
Often, homeowners hide from a foreclosure notice, fearing that when it comes in the mail, they will need to leave their homes within weeks, Robson said.
"They don't understand that a sheriff's not going to come to their house next month," she said. "They don't understand that even if they did nothing … (getting evicted) is like a year" away from receiving a foreclosure notice.
Some homeowners call Robson after their home gets sold, she said, looking for ways she can help them keep it.
"And that's the first time they've reached out to an attorney," she said. "And there's very minimal stuff I can do for them at that point."
Waiting to reach out for free legal advice means homeowners miss actual opportunities to save their home, Robson said.
For instance, a home cannot get sold while being reviewed under the Home Affordable Modification Program, a federal initiative that sets minimum requirements for loan modifications, Robson said.
That program intended to stop the clock on home sales until a loan modification at least gets considered, she said. But homeowners don't always know that and often sell their homes while under review, Robson said.
"I had two people in the last couple weeks at CLC come in and they had valid defenses — they were still being reviewed," she said. "But for both of them the sale had already been confirmed, and I was like, 'There's nothing we can do.' So, they shut doors that are open to them and it's really, really sad. It's a bad result."
Berwyn Causey, a union painter who said he worked the equivalent of one out of the past three years, said he tried navigating the foreclosure process on his own before a judge suggested he find a lawyer to help him keep his Park Forest home.
He said he retained an attorney to appear in court on his behalf for $600 a month in October. He said he paid the attorney through January.
"And in a nutshell, it basically got sold out from under us with an attorney," Causey said. "I don't know what really to do."
On a Thursday in June, he went to the Chancery Advice Desk to get help filling out a request to stay the eviction process scheduled to start the following Tuesday.
He needed more time to find a rental home for his wife and five children, he said.
Because of the short amount of time until his scheduled eviction, Ariel Valdes, a staff attorney at the advice desk, said the judge would unlikely grant the stay.
Causey said finding an affordable home to rent can become challenging in the current market.
"I've got some leads," he said. "You run into a lot of different obstacles. But you keep looking until you find somebody that's willing to go off your previous history and take the money that you have."
Finding the right advice
Valdes, an attorney, said homeowners receive all the information they need to start defending their home from Day One in the process.
"It tells you what you have to do," said Valdes, displaying a client's summons in his small cubicle on the 13th floor of the Daley Center.
"And you can see in big, bold letters: 'Do not ignore this document.'"
It goes on to say, "You may still be able to save your home."
Turn to the second page and a homeowner finds phone numbers for legal aid services like CLC and CVLS. It tells them what number to call to start the process for mediation.
Some of the advice, such as scheduling a meeting to determine if you meet mediation requirements, could be done by the homeowner alone, Valdes said.
It requires a simple phone call, he said, but many people wait outside his office starting at 8 a.m. for help making that call. Because of such a high demand, a long line forms outside. They typically stop taking new clients at 10 a.m. And many wait until 2 p.m. for help.
Attorney Jerry Szymanski, who volunteers at CLC, said one of the most important roles pro bono attorneys serve for distressed homeowners comes from providing a simple, face-to-face explanation of the process.
Often times, homeowners get confused by a bombardment of mail selling them advice or legal support before they even receive their summons for foreclosure, he said.
"They're getting so much in the mail between delinquency notices, collection notices and phone calls, that when it comes to their foreclosure case, it's yet another person knocking on their door for money that they don't have," he said.
Despite what Valdes called straightforward directives to get help, some homeowners facing foreclosure don't know to reach out to legal aid services until they appear in court.
Gladys Guerra said she became frustrated without an attorney helping her deal with her mother's foreclosure. She couldn't afford a private attorney to save the home where both she and her mother now live in Chicago's North Side Edgewater neighborhood.
"We didn't even know (free attorneys) existed until we went to court," she said.
At court, her mother broke down in front of the judge when he asked, "'Do you know you're about to lose your home?'" Guerra said.
"He handwrote the number for the Legal Assistance Foundation and I called the following day. That's when we were connected to Kathleen (Robson) and she explained the process and made us feel really relieved."
Robson worked with Guerra and her mother until they eventually got a loan modification that Guerra said they can afford.
When she tells others facing foreclosure about Robson helping her save her home for free, she said many don't believe her.
"That's not true. How much did she charge you?" she said they say to her.
"And I keep saying … go to the Legal Assistance Foundation. There are resources available to help you save your home. Because I can guarantee my mother would be without a home had Kathleen not intervened."
High demand, wasted supply
Jeff Jones, a volunteer attorney who has handled about 90 mediation cases for CVLS, said the application process leading up to mediation wastes absurd amounts of time.
"It's been 2½ years of frustration for these homeowners," Jones said. "Most of them have sent in five to 10 different sets of documents over a year or two trying to modify their loans."
Jones and the other pro bono attorneys interviewed for this article detailed similar scenarios resulting in the long-waits: A homeowner and pro bono attorney prepare all the relevant materials for a mediation application, send them to the bank or loan servicer and then, they wait.
Patty Nelson, director of the Foreclosure Mediation Program at CVLS, said people wait for 30 to 60 days or until they receive a letter from the mortgage servicer scrapping their application.
Often, applications get denied for things like checking one wrong box or documents sitting at the bank for so long that they request an updated version, she said.
That means the 400 trained pro bono attorneys, 200 of which remain active, don't get to as many cases as they could, she said. In other words, with cresting demand for pro bono attorneys, the process wastes precious time for these lawyers.
Daniel Koen, a CVLS volunteer who handled about six mediations, said in his experience, it typically takes about five meetings with a bank attorney until they receive a "complete file."
A typical loan modification adds the delinquent payment onto the amount owed on the mortgage. As months tick by waiting for mediation, the delinquent payment grows larger. That gets sprinkled onto future payments with interest added.
"The longer it goes on … the more that's owed," Nelson said. "The more that's owed, the less likely that you're going to be able to afford to pay it off."
John Zrnich, a CVLS volunteer who handled about nine mediations, said foreclosure defense attorneys can't defend against a bank that lets documents go stale.
"And it's unfortunate," he said. "Our clients will scramble in good faith to get everything together for a mediation, and if the bank sits on it, then there's nothing we can do."
Cook County Circuit Judge Moshe Jacobius, who presides over the Chancery Division, said the court brought in case managers to help homeowners navigate the system.
In late June, The Chicago Community Trust began working on developing a flow chart to map the process for homeowners, he said.
"It's a very intricate program on the one hand, and it's complex," he said, referring to the mediation program developed in 2010. "On the other hand, the program is unique because it is basically one of the most extensive programs in terms of help that's provided in the nation."
Since the program started, the court appointed 4,072 cases to mediation, says the Cook County Circuit Court's Chancery Division Mortgage Foreclosure Mediation Program June 27 report.
Of those, 3,434 got completed by late June, with 1,304 ending in homeowners keeping their home.
Still, due to the court's backlog of mediation cases, the time to complete a mediation case from the issuing of a foreclosure notice stands at nearly 21 months, the report says.
"One of the things that we've worked on is trying to cut down on the number of cases that are awaiting mediation resolution," Jacobius said.
The case managers triage cases by sending to mediation those homeowners with the best chance of reaching an agreement to modify their loan and stay in their homes, he said.
For instance, the court does not want to send to mediation cases that will result in a homeowner giving up their home through a dignified exit or "cash for keys" settlement where the remaining balance on a mortgage gets forgiven when the owner leaves the home.
But time and money continue to be a factor for several local residents.
Geraldine Patterson, one of Zrnich's clients, said her home in Chicago's South Side Beverly neighborhood went into foreclosure after business slowed down during the recession at the family's towing service.
She said she bought a fax machine because of all the documents she needed to send to her bank.
"I can't plan my day completely because I have to stop, gather up all these documents and refax them," she said. "And I tried doing some temporary work, but it's like you're on call … I plan to be free, but now I have to spend time doing this — getting income statements together again."
Patterson said her mortgage payment became about $2,100 a month when she fell behind on payments. After a modification, she paid $1,100 for a short time. Today, though, after adding late payments and fees, she said her payment might add up to about $2,700.
She said she considers the mediation a success, "because otherwise I would be in foreclosure."
Still, with her tow truck business not picking up and her mortgage payment at $2,700 a month, she might revisit the process.
She said: "Are we going to have to go through this again?"