As a young lawyer sitting on a Bar Committee, I once naively complained--with a New Mexico Supreme Court Justice in attendance-- that the New Mexico courts' dockets were clogged. The judge rebuked me strongly, saying that I sounded like I was talking about toilets--not the courts. If the old judge saw the present budget mess in the New Mexico courts he might agree. The courts clogged condition significantly affect banks trying to clean up their asset quality by foreclosure and collection actions.
On Sunday February 13 the Albuquerque Journal had a byline, "Courts Struggle to Stay Afloat". A Tucumcari District Judge was reported as having given up his office copier to save $120 a month. In Albuquerque layoffs of security personnel added to more than 16 unfilled court staff vacancies. This concerned some judges since a year before an outraged spouse was shot after threatening his wife and court staff. The Journal article reported that the current Chief Justice, complained of likely cuts in the court system budget, noted that the recession had added to the work of the courts--more foreclosures, more collection actions, more conflicts and criminal cases. The Journal reported one legislative committee meeting at which judges' complained of case loads increasing by 7 % and budgets cut by 10 %. An executive of the court system was reported as stating the cuts planned by the legislature and Governor would result a week's furlough for all employees in the court system.
Courts take people. Every time you file a foreclosure complaint you go to court and manually process the complaint in the clerk's office, standing as the clerk checks the papers, stamps them, etc.. Since there are fewer clerks, the process takes longer. Often the chief clerk shuts down the line with you or others waiting to file. The judge's staff who schedule and keep track of the judge's cases is overworked or furloughed. After the complaint is filed most papers are mailed, and they have to be sorted, filed and brought to the judge's attention and scheduled for hearing. Fewer cases are settled since savvy lawyers know that the system is almost broke and cases will not move as they did a few years ago. There is no incentive to settle.
Five years ago an uncontested mortgage foreclosure might take 4 months to complete, assuming no intervening mechanics liens, and timely filing and publication, etc. as required by law. Now, with the heavier case loads, thinner staff and less scheduling help, an uncontested mortgage foreclosure might take 6 months. And now comes the real clog. Times are hard. An increasing number of defendant debtors think, "if I can just buy more time, I can make it out of this--I will see my old college roommate who went to law school". Roomie says, "thin case, but I think you should counterclaim. It will buy you time." "How much time", you ask. Roomie, " at least a year." When a counterclaim is filed it adds the whole mix of litigation to the case with discovery, disputes about discovery, motions, etc. All of which add delay to the foreclosure.
Why is New Mexico so bad? Aren't Colorado and Arizona suffering the same problems? Arizona and Colorado have had Deeds of Trust for many years. Absent exceptional circumstances the foreclosure of a Deed of Trust can not be stopped by litigation. From notice of default to the banks taking the property normally takes only two months. New Mexico now has a Deed of Trust statute, but only newer loans have used the Deed of Trust. Due to some drafting problems no bank started using Deeds of Trust in New Mexico until after 2007. Most foreclosures involve the old mortgage procedures. In addition, New Mexico has a very weak version of a statute that prohibits claims concerning loans above $25,000 without a written commitment. New Mexico's version of the statute rarely produces a favorable result.
Two added factors aggravate the delay or push the bank into a less than favorable settlement:: (1) New Mexico judge's reluctance to grant summary judgment and (2) the in terror em effect in some New Mexico counties of a trial by jury. Summary judgements were invented by the federal courts to permit a party to file a motion for summary judgement to end the case before trial if "there were no material issues of fact" concerning the merits of the case. In New Mexico most state judges will not grant summary judgement if there is any hint of a dispute. Many time even a loud and confusing argument will persuade the judge to deny the motion. Added to this inability to stop weak cases at the outset, is the liberal view of some juries in certain parts of New Mexico. Banks are never favorites of juries, but a jury in one of the high unemployment, high poverty counties makes a bank officer check the bank's lender liability insurance limits
Is there a solution, absent a change in the economics of New Mexico? Yes, to an extent, although little can be done to fix the old mortgage loan foreclosure problems. A bank should do at least four things immediately : (1) if possible do all loans and renewals on a Deed of Trust; (2) insert a "waiver of jury trial" in your loan forms or use the most current LaserPro, or similar vendor form, which have the waiver of jury trial language in it; (3) always use a "workout agreement" or similar "without prejudice" document when negotiating a renewal of a loan (in the writer's experience most sizable foreclosures have been renewed, sometimes with contentious negotiations); and (4) always use a tight, well drafted commitment letter for any renewal.
After this you may agree with Ambrose Beirce: "Lawsuit: a machine you go into as a pig and come out as a sausage." The Devil's Dictionary
Marshall Martin
Comeau, Maldegenn, Templeman & Indall, LLP
(505) 982-4611
mmartin@cmtisantafe.com
newmexicobankinglawyer.blogspot.com
I am very pleased by your stories. I want more!
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