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Rhode Island Judge 'Reluctantly' Lifts Foreclosure Injunction

By Aditi Mukherji, JD on September 23, 2013 | Last updated on March 21, 2019

In response to an order from the First Circuit Court of Appeals, U.S. District Judge John J. McConnell Jr. has "reluctantly" lifted an injunction preventing foreclosures and evictions from proceeding in the 825 foreclosure cases pending in Rhode Island's federal court.

In June, the First Circuit Court of Appeals found that McConnell's August 2011 order staying foreclosures and evictions in the pending cases was effectively an injunction, despite the parties being unable "to show a likelihood of success" of prevailing in their cases, which is an essential requirement of continuing injunctive relief, reports the Providence Journal.

McConnell's caseload includes borrowers from across Rhode Island who have challenged their foreclosures both before and after the foreclosure process. With the injunction lifted, what will become of the homeowners?

"Reluctant" Foreclosures

In all likelihood, the countless people with pending federal cases will lose their homes, which is exactly what McConnell was trying to avoid.

"The Court [dissolves the injunction] reluctantly because it continues to believe that ... it is in all parties' and the Court's best interest to have the parties talk to each other in a meaningful way and to attempt to amicably resolve these matters, without the threat and/or negative consequences of having plaintiffs' homes taken away from them due to foreclosure or eviction," McConnell wrote in his decision.

The First Circuit's order means the eviction process could start immediately for borrowers who have remained in their homes after a foreclosure. The foreclosure process can begin in Rhode Island once a payment is 60 days late, and if banks move quickly, it can take about 110 days from the date of the first missed payment to lose a house.

Fortunately, McConnell has been on the foreclosure warpath and had immense success with a mediation program led by his appointed special master, Merrill W. Sherman. He's managed to dispose of nearly 300 cases in the span of two years, reports the Journal. That number is expected to grow so long as lenders cooperate.

A Second Chance: New Foreclosure Mediation Law

After a widespread lull in 2011, foreclosures have been on the rise again across the country.

To stem the tide of foreclosures rattling Rhode Island, a state law just passed that requires lenders to take part in mediation before they can process foreclosures and send notifications. Rhode Island Housing is running the program, which has met some positive results. Homeowners with unresolved federal cases might consider this alternative. There are exemptions, which include mortgages that are seriously delinquent or that are found to originate in the state of Rhode Island, but all others will be subject to the process.

But the sad reality is that the dissolved injunction will likely spell foreclosure for the vast majority of the 825 pending cases.

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