DS News

42 COUNSEL'S CORNER Rolling With the Changes in an Ever-Evolving Default Servicing Industry Counsel's Corner: Fast-Track Foreclosures Put Housing the Right Track As General Counsel for nationwide property preservation and field services company Safeguard Properties, Linda Erkkila's broad scope of manage- ment covers regulatory issues that impact Safeguard's operations, pro-active risk mitigation, litigation and claims management, and counsel related to mergers, acquisition and joint ventures. Her practice spans more than 15 years, and her experience, both as outside and in-house counsel, covers a wide range of corporate mat- ters, including regulatory mandated public disclosure, corporate governance compliance, risk assessment, and merger and acquisition activity. She recently spoke with DS News about proposed fast-track foreclosure legislation in Safeguard's home state of Ohio and the bill's possible implications as a national model. How do you think the fast-track foreclosure law will impact the housing market? First and foremost, lenders have to avail themselves of the statute for there to be any impact. at may sound like stating the obvious, but there are mul- tiple states that enacted fast-track foreclosure stat- utes that are not used by lenders, and those tend to be cases where the statutes are not well crafted and provide little or no benefit to the lender, or where the procedures are overly cumbersome. Ohio's bill is well-drafted and, assuming lenders take advantage of and use the statute if enacted, the housing market should slowly start to improve as properties start to turnover and values slowly creep up. e inventory of abandoned and blighted houses that sell at a discount will go down, and a more traditional housing market can be restored. How do you think it will impact the industry in Ohio? A traditional housing market, and by that I mean normally functioning housing market, is a keystone to any state's general economic health. Ohio has had its share of struggles, but Ohio also has a great deal to offer in critical and sophisticated industries, such as healthcare, educa- tion, aerospace, and bioscience. Getting Ohio's housing market on an upward, positive trend coupled with continued growth in those industries can only bring positive overall economic impact in Ohio. Do you think there is any downside to this law? I see no apparent downside. When you reach a point where someone stops paying the mortgage, has abandoned the home and is not responding to any of the lender's outreach efforts, there is no benefit to prolonging the inevitable. At that point, the communities in which the aban- doned properties are located suffer, as do the local governments and court systems due to the overall strain that these properties put on communi- ties, governments and court systems. To be clear, lenders want to keep borrowers in their homes, and they take many steps prior to foreclosure to make that possible. When those efforts fail and the property is abandoned, efforts have to shift to protecting the property and the surrounding neighborhoods and communities. How do you find the balance between not dragging out the foreclosure process but at the same time making sure borrowers have been given all the loss mitigation options? If you set timelines and milestones for responsive- ness by borrowers, absolutely deference should be given to providing the borrowers the opportunities they need to modify their loans. A decent indica- tor of a borrower's desire to work through a loan modification is whether the borrower continues to occupy the property. Once a borrower stops paying the mortgage and vacates the property, and is not responding to outreach, foreclosure is likely the inevitable outcome. Again, to be clear, the best outcome for a lender is to work out a loan modifi- cation with the borrower to keep the borrower in the property. To the extent there are foreclosure statutes that set forth timelines for outreach to give the borrower the opportunity to stay in the property, those opportunities take precedence. at is the better outcome. But when you get to the point where all that fails, efforts need to be redirected to protecting the community. LINDA ERKKILA: GENERAL COUNSEL, SAFEGUARD PROPERTIES

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