PROVIDENCE, R.I. (AP) — A federal judge is considering how to move forward on nearly 800 mortgage foreclosure cases after an appeals court noted problems with how he set up an order designed to deal with the state’s mortgage crisis.
U.S. District Judge Jack McConnell heard arguments Wednesday in a courtroom filled nearly to capacity with lawyers for financial institutions and borrowers. He said he would issue a ruling later.
The 1st U.S. Circuit Court of Appeals said last month that McConnell did not follow proper procedures when he halted all foreclosure cases before the court and ordered financial institutions to try to settle with homeowners behind on their mortgage payments before allowing them to foreclose.
A special master appointed by the court to oversee mediation in the cases said in a report filed Wednesday that nearly 200 cases had been settled or otherwise dismissed under the program as of June 30.
Joseph Yenouskas, who argued on behalf of financial institutions, told McConnell the borrowers who brought the lawsuits had been loaned $250 million by the institutions, according to what he termed a ‘‘back-of-the-envelope’’ calculation.
Among the issues McConnell must consider are whether the homeowners taken together are likely to succeed in the lawsuits they have brought to challenge their foreclosures and whether the homeowners have standing to sue to stop the foreclosures of their properties.
George Babcock, who represents around 500 families being foreclosed upon, has said he fears the appeals court ruling will mean an end to a unique program that has helped struggling families. He and other lawyers for the homeowners argued the court should consider their cases as a group because they present similar issues and ‘‘irreparable harm’’ would come to their clients because they could lose their homes.
But lawyers for the financial institutions said the cases were so different that McConnell should look at them each separately. Yenouskas argued that many of the property owners owned multiple houses or had abandoned their properties. He said both sides agree that the property owners haven’t repaid what they should.
Yenouskas said the cases should be allowed to move forward.