See the following article in today's Cleveland Plain Dealer.  I would anticipate an increase of filings in federal court to other parts of the country..

Lawyers find quick way to foreclose

Lawyers who do not want to wait for their foreclosure cases to wend through a swamped Cuyahoga County Common Pleas Court have jumped to an express lane in federal court.

Seizing on a long-established but previously little-used option, lawyers have filed more than 350 foreclosures this year in U.S. District Court, up from eight in 2003. Now, all the lawyers have to do is direct prospective buyers of confiscated homes to sales that have attracted no interest.

The Columbus law firm of Manley Deas Kochalski has handled most of the cases. Kevin Williams, a lawyer with the firm, estimated that he has filed 400 to 500 foreclosures in the federal court in the last two years, out of more than 550.

"It is an attempt to find creative solutions on our part," Williams said.

"We're just trying to do a good job for clients."

For a foreclosure to get into federal court, the debt must total at least $75,000 and the parties must be from at least two different states. In the modern mortgage market, out-of-state lenders are common.

Most of the foreclosures are uncontested and sail through in three to six months, which is important to lawyers who are graded by lenders according to speed.

A recent study by Cleveland State University found that the Cuyahoga County court has shortened the average length of a foreclosure to just under a year, though the court says new cases are moving through much more quickly than that.

The federal court can move faster because its foreclosure volume is much lighter than the county's backlog, which totaled 11,398 as of Oct. 6, according to the CSU study. The federal court also requires that all cases, motions and other documents be filed electronically, eliminating paper work.

Going to federal court can save more than time - it can also save money.

The federal court charges $350 to file a foreclosure; the county court fee is $475.

While some foreclosure lawyers have found their way to federal court, buyers looking for bargain-priced homes have yet to follow.

County foreclosure sales fill the Justice Center auditorium on Monday mornings. But auctions held at 12:30 p.m. the same day at the nearby federal courthouse draw only attorneys who reclaim property for mortgage holders.

At the federal auction last week, eight properties sold in 15 minutes. In each case, the only bidder was Cleveland lawyer Cliff Babcock, standing in for Manley Deas Kochalski. He faced no competition for property in Cleveland, Bedford, Maple Heights, Oakwood and Warrensville Heights.

Lenders' lawyers bid about the minimum -- two-thirds of appraised value -- but no money changes hands because the companies would be paying themselves. The lawyers would love to be outbid.

"It's an opportunity," said Mark Dottore, one of 18 "master commissioners" who auction land for the court after having it appraised. "We've had some Gates Mills properties. We've had some Westlake properties."

The court appointed the commissioners last summer to keep on top of a growing number of auctions.

The duty would normally fall to the U.S. Marshals Service, but U.S. District Judge Dan Polster said the agency lacked experience and has its hands full guarding the courthouse, transporting federal prisoners and tracking fugitives. The part-time commissioners, who have real estate experience, receive a flat $500 per case, paid by the lenders.

Stephen Bucha III heads the magistrates who preside over foreclosures in the Cuyahoga County court and prepare them for judges' rulings. The magistrates came under fire after foreclosures dragged out well beyond the one year that the Ohio Supreme Court says is reasonable.

Bucha said the court, which increased its corps of magistrates from nine to 13 this year, has begun to wrap up new cases in as little as six months. But he does not mind if lawyers want to take their cases elsewhere.

"We welcome all the help we can get," Bucha said. "If it reduces our caseload, it helps the remaining cases move faster."

To reach this Plain Dealer reporter:

tott@plaind.com, 216-999-5739

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