New Washington Foreclosure Fairness Act: House Bill 1362

The New Foreclosure Law Effective July 13, 2011

Below is our outline of the new foreclosure law - it may be a bit scattered and requires a fairly in depth background in foreclosure law to understand some of the issues. Nevertheless, it may be something some of you find value in.

I. Requirements for Trustee’s Sale

a. Deed of Trust contains a power of sale
b. Property isn’t used principally for agricultural purposes
c. Borrower has defaulted
d. No currently pending action by bank to take the house because of borrower’s default
e. DOT has been recorded
f. Trustee present in WA before the date of the NOTS through the date of the sale
g. Trustee has proof the bank owns the note before NOTS is recorded, transmitted, or served
i. Declaration by the bank stating that it holds the note is sufficient.
h. Bank sends borrower aNODat least 30 days before notice of sale is recorded.

II. Requirements for Notice of Default

a. Issuance

i. 30 days after bank’s initial contact with borrower was initiated (33 days after date on letter) or 30 days after satisfaction of contact requirements with no response from the borrower OR
ii. 90 days after initial contact if borrower responds

Weitz - if you respond for intitial notice for mediation, you can have at least 90 days more in the home if the modification or other alternatives do not work.

b. Notice to Borrower

i. Sent to borrower’s last known address by first-class mail, registered or certified, with return receipt
ii. Copy posted in a conspicuous place on premises or borrower personally served

c. Contains itemized account of total amount necessary to reinstate DOT

d. Includes declaration from bank that it contacted borrower, tried to contact borrower with due diligence, or borrower has surrendered property. (Foreclosure Loss Mitigation Form)

III. Bank’s Obligation to Make Initial Contact

a. Due diligence contact requirements

i. First-class letter to borrower
1. Must contain certain information
2. Response: Borrower has 30 days to respond after initial contact (33 days after date letter sent). If borrower does not respond, NOD may be issued.

ii. Follow-up phone call to borrower

1. At least 3 times at different hours on different days
2. Automated dialing system ok if call is connected to a live rep when answered
iii. Certified letter (Only f borrower doesn’t respond within 14 days after the phone call requirements are satisfied)

b. Bank can proceed with NOD without contacting if borrower has filed for bankruptcy or surrendered the property

Weitz - note that a BK could take away the mediation requirement(s).

c. Contact requirements only apply to DOTs recorded against owner-occupied residentialreal property

IV. Role of Housing Counselor/Attorney

a. Duty to act in good faith to reach a resolution within 90 days after initial contact

b. Borrower can seek assistance from a housing counselor or attorney at any time

c. Good Faith Duty to Assist Borrowers
i. Prepare borrower for meetings with bank
ii. Advise borrower about what documents are needed for a resolution
iii. Inform borrower about foreclosure alternatives
iv. Provide advice and guidance as necessary
 
d. Mediation Referral: Counselor/attorney sends notice to borrower and HUD that mediation is appropriate

i. Requirements
1. Mediation is appropriate under the circumstances AND
2. Notice of Sale has not been recorded

ii. Mediation referral doesn’t preclude trustee from issuing NOD

e. Not liable for civil damages, unless gross negligence or wanton misconduct

V. Mediation

a. Timeline Requirements
i. If borrower requests a meeting, the bank must schedule it before NOD issued
ii. Referring counselor/attorney sends notice to borrower and HUD that mediation is appropriate
iii. Within 10 days of receipt of notice of mediation referral, HUD must

1. Sends notice to bank, borrower, referring attorney/counselor, and trustee that parties have been referred to mediation

2. Select a mediator and notify parties of the selection
iv. Mediator must send written notice of time, date, and location of the mediation session to the borrower, bank, and HUD at least 15 days before it is scheduled
v. Mediator must convene the session in the borrower’s county within 45 days after receiving the referral from HUD (parties may agree to extend this time limit)
vi. Bank and borrower must try to reach a resolution within 90 days after initial contact is sent and NOD issued.

b. Content of Discussion (issues mediator must require parties to consider)

i. Assessment of borrower’s financial ability to modify or restructure the loan and a discussion of options.
ii. Borrower’s current and future economic circumstances
iii. Net present value of receiving payments pursuant to a modified mortgage loan as compared to the anticipated net recovery after foreclosure
iv. Any affordable loan modification calculation and net present value calculation when required under any federal mortgage relief program

c. Attendance of Parties: In person, unless waived by the borrower

i. Person authorized to modify or agree to alternative foreclosure resolution may participate by phone or video as long as a bank representative is there in person
d. Any modification offered by borrower’s representative is subject to borrower’s approval

VI. Duties of the Parties (required for good faith mediation)

a. Homeowner’s Duties

i. Provide bank with documentation at least 10 days before mediation or pursuant to mediator’s instructions
1. Borrower’s current and future income, debts and obligations, and past 2 year’s tax returns

b. Bank’s Duties

i. Provide borrower with documentation at least 10 days before mediation or pursuant to mediator’s instructions:
1. Statement of loan balance (as of 1st day of the month of the mediation)
2. Copies of note and DOT
3. Proof bank owns the note (bank declaration is sufficient)
4. Itemized estimate of any arrearages
5. Payment history and schedule
6. Data relevant to net present value analysis
7. Explanation of any denials of foreclosure alternatives
8. Most recent available appraisal or BPO relied on by bank
9. Pooling and servicing agreement, if bank claims it prevents a modification
 
c. Other Ways Parties May Violate Duty to Mediate in Good Faith

i. Failure to timely participate in mediation without good cause
ii. Failure to pay mediation fees as required
iii. Failure to designate representatives with adequate authority to reach a resolution
iv. Bank’s request that borrower waive future claims in connection with the DOT as a condition of agreeing to a modification

VII. Mediator

a. Mediator must send certification to HUD and trustee within 7 days after session of
i. Date, time, and location of mediation session
ii. Names of persons who attended the mediation
iii. Whether resolution was reached
iv. Whether parties participated in good faith
v. Description and result of the net present value test used

b. Trustee cannot record the NOS before receipt of certification
i. If he does not receive it, he can record it 11 days after the date it was due. However, if the mediator subsequently issues a certification alleging that the bank violated its good faith duty, the trustee can’t proceed with the sale

c. Certification that Parties acted in Good Faith
i. Bank can proceed with foreclosure if no agreement is reached
d. Certification that Bank Failed to Act in Good Faith
i. Constitutes a defense to the nonjudicial foreclosure action
ii. Not a defense to a judicial foreclosure action or a future nonjudicial foreclosure action if a loan modification is agreed on and the borrower subsequently defaults

e. Certification that net present value of the modified loan exceeds the net present value of the anticipated net recovery at foreclosure
i. Constitutes a basis for borrower to enjoin the foreclosure

f. Certification that failed to act in good faith

i. Authorizes the bank to proceed with foreclosure

g. Fees: Mediator can charge reasonable fees (can’t exceed $400 for a 1-3 hour session unless waived or parties agree otherwise)
i. Mediator must provide an estimate before the mediation
ii. Fee must be equally divided between bank and borrower
iii. Bank and borrower must tender their half 7 days before mediation

h. Mediator qualifications
i. Attorneys, housing counseling agencies, retired WA judges
ii. HUD may establish a required training program for mediator approval

VIII. Foreclosure Fairness Account

a. Banks must pay HUD $250 for deposit into the foreclosure fairness account for every owner-occupied residential real property for which they issue an NOD.

For more information on your rights in Foreclosure, Short Sale or Bankruptcy, consider contacting a Kirkland Foreclosure Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Ave, ste 103
Kirkland, WA 98033
(425) 889-9300

weitzlawfirm.com

Second Mortgage Loan Modification Programs (2MP)

2MP Program:

If your first mortgage was permanently modified under HAMP and you have a second mortgage on the same property, you may be eligible for a modification or principal reduction on your second mortgage under 2MP. 2MP is designed to work in tandem with HAMP to provide a comprehensive solution for homeowners with second mortgages to increase long-term affordability and sustainability. If the servicer of your second mortgage is participating, they will automatically evaluate you for a second lien modification. Eligibility*

You may be eligible to apply if you meet all of the following:

•Your first mortgage was modified under HAMP.
•You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.•You have not missed three consecutive monthly payments on your HAMP modification.
•You owe more than $5,000 on your second mortgage.
•Your monthly second mortgage payment is more than $100.
*Eligibility criteria are for guidance only. Contact your mortgage servicer to see if you qualify for 2MP.

Program Availability

Servicers participating in 2MP are:

1.Bank of America, NA
2.BayviewLoan Servicing, LLC
3.CitiMortgage, Inc.
4.Community Credit Union of Florida
5.GMAC Mortgage, LLC
6.Green Tree Servicing LLC
7.iServeResidential Lending, LLC
8.iServeServicing, Inc.
9.J.P.MorganChase Bank, NA
10.NationstarMortgage LLC
11.OneWestBank
12.PennyMacLoan Services, LLC
13.PNC Bank, National Association
14.PNC Mortgage
15.Residential Credit Solutions
16.ServisOne Inc., dbaBSI Financial Services, Inc.
17.Wells Fargo Bank, NA

Our Firm:

Weitz Law Firm, pllc
5400 Carillon Point, Bldg 5000
Kirkland, WA 98033
(425) 889-9300

Foreclosures drop - but for how long?

Realty Check video below - Foreclosures fell nationwide in Q1 2011, but look out - the moratorium on foreclosures likely played a role. I would not be surprised to see an uptick in Q2 & Q3.

Foreclosure Fairness Act - New Washington Law

AP (Seattle Times) Gov. Chris Gregoire signed into law on Thursday a bill that could help more homeowners in Washington state avoid unnecessary foreclosures.

The bill, the "Foreclosure Fairness Act," gives distressed homeowners working with housing counselors or attorneys the right to in-person mediation with the bank or company servicing their mortgage.

See our easy (easier) to read outline here: Washington Foreclosure Fairness Act Outline.

See SB 1362.

Washington, among the 27 states where court approval of foreclosures isn't required, becomes only the third state — after Nevada and Maryland — to adopt a foreclosure-mediation program in which a homeowner can seek to modify terms of their loan.

"There's no silver bullet, but this will at least be a competent response to the irresponsibility of the financial industry," said Bruce Neas, a Columbia Legal Services attorney who helped negotiate the bill.

State regulators, who receive hundreds of complaints each year against national mortgage servicers, have been stymied by federal rules that limit their power to intervene.

The only recourse for homeowners has been going to court, where they're usually outmatched by servicers.

Also Wednesday, federal regulators announced they had ordered eight national banks — Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank and Wells Fargo — to hire an outside firm to review all foreclosure actions from 2009 to 2010 and submit a plan to remedy "all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies" identified by outside consultants.

The move by state lawmakers to require mediation comes as the foreclosure crisis in Washington continues. In the first three months of the year, more than 5,600 homes were seized and more than 7,000 were headed to foreclosure auction, according to RealtyTrac.

In signing the bill Thursday, Gregoire noted that Washington state ranks 10th in the nation in the number of foreclosures and that more than 30,000 families this year face the risk of losing their homes.

The bill also provides an estimated $7.5 million for foreclosure-prevention efforts and more than double the number of housing counselors. Washington has just over 40.

"The real hope is that by adding the counselors, the banks and families would reach some kind of agreement before going to mediation," said Kim Herman, executive director of the Washington State Housing Finance Commission.

Under the new law, once a homeowner becomes delinquent, the servicer must send a letter asking the owner to contact the server and urging the person to call a housing counselor or attorney for help.

Homeowners who respond to the letter would be given 60 more days before the servicer could file a notice of default.

If the counselor or attorney couldn't resolve the issue with the servicer, they could refer the homeowner to a mediator through the state Department of Commerce.

The Commerce Department selects the mediator, who must hold a session within 45 days. The homeowner and servicer share in the cost of the mediator's fee, which can be up to $400.

Weitz - $400 split = $200 to have at least two more months in your property - money well spent even if you don't reach terms on the mediation.

If the mediator finds the servicer didn't participate in good faith, a homeowner can use that to ask a court to stop the foreclosure. The state Attorney General's Office also could pursue penalties against servicers.

When lawmakers opened negotiations on the bill, consumer advocates were surprised by the bankers' first move.

Without prompting, the Washington Bankers Association offered to pay a $250 fee for every default notice filed, with the stipulation that 80 percent of the money pay for housing counselors.

"It did surprise people," Herman said.

The association, which represents national and community banks, suggested the fee because it wants more delinquent homeowners to work with housing counselors, said James Pishue, the group's president.

National studies show that homeowners who work with trained housing counselors have much higher success rates in reaching an agreement with their servicer.

"We thought that would prevent the need for mediation," Pishue said. "Ultimately it results in fewer foreclosures."

Marc Cote, a housing counselor who oversees the state's foreclosure-prevention hotline, said he's pleased with the measure.

"The main thing I'm hopeful for is that the mediation piece will inspire servicers to resolve the hundreds, in my experience, of [loan] workouts that are still not resolved after months and months."

Weitz: like most government programs, I remain skeptical. That said, I'm quite certain the following will occur: 1) banks are going to lose a lot of money on this program - it is a huge pain for them; 2)borrowers are going to be able to extend the already lengthy foreclosure process; and 3) the number of Notice of Defaults issued in the next 90 days (prior to the bill taking effect) will ramp up dramatically. As someone who fights for homeowners, I think its a great law - but I don't think it fixes anything long term.

For more information, consideration seeking guidance from a Seattle Foreclosure Attorney.

Our Firm:
Weitz Law Firm, PLLC
5400 Carillon Point, Bldg 5000
Kirkland, WA 98033
(425) 889-9300

weitzlawfirm.com

How to Avoid Loan Modification Scams

With millions of Americans underwater on their mortgages and facing foreclosure, loan modifications have emerged as a potential solution to the housing crisis. But the push to modify loans has also provide new opportunities for con artists, according to fair housing advocates.

"All those people who did unconscionable things to people with the subprime and predatory lending…they're making their living now in these mortgage modification scams," says Shanna Smith, CEO of the National Fair Housing Alliance (NFHA), a consortium of more than 220 private, non‐profit fair housing organizations.

A recent investigation by the NFHA and three sister organizations found the loan modification industry as being "rife with corrupt practices."

Among the findings:

55% required an upfront fee to start work.
43% guaranteed or promised they could secure a loan modification before reviewing documents.
24% advised or encouraged homeowners to stop making their mortgage payments or to stop contacting their lenders.
12% discouraged homeowners from seeking free help from government-approved housing counseling agencies.

In the accompanying video, Smith describes the findings of the investigation and offers advice for homeowners on how to avoid being scammed.

First and foremost, "anybody who asks for upfront fees is probably a scammer," she says.

Second, Smith advocates homeowners work with their current lender and take advantage of counseling services offered by the Department of Housing and Urban Development (HUD). "It may take longer but it's free and they're not going to scam you," she says.

Third, Smith says it's a "myth" that you have to be behind on your mortgage in order to qualify for a loan modification. "Don't ever stop paying because someone advises you," she says. "Don't lie about your income. Be honest and forthright…with your lender."

Fourth, don't sign over your deed to a third party who promises to pay your mortgage while working out a modification with your lender. This relatively new industry practice typically results in homeowners having their home sold out from under them, Smith says.

Fifth, only use HUD-approved loan modification companies.

Whether it's a promise to refi at a very low rate or quickly get you a loan modification, "if it sounds too good to be true, it probably is," Smith says.

While this may all seem self-evident, millions of Americans got in way over their heads during the housing boom earlier this decade and were taken advantage of by scam artists. Many financial criminals are now returning to the scene of the crime.

Smith's organization has been sharing the results of its study with lawmakers and the new Consumer Financial Protection Agency. NFHA's hope is that state and federal law enforcement agencies will investigate the loan modification industry, where it's common practice for firms to frequently change their name, phone numbers and addresses in order to stay one step ahead of the law — and the consumers they've recently bilked.

"It's like whack-a-mole," Smith says. "People in America, you're at risk of being scammed."

Weitz - There is nothing these companies do that you can't do for yourself. Simply look into the HAMP program as most modification are accomplished through this government program.

See Makinghomeaffordable.gov

For more information on your rights with Distressed Real Estate, COnsider seeking guidance from a Seattle Short Sale Attorney.

Our Firm:
Weitz Law Firm, PLLC
413 14th Ave W
Kirkland, WA 98033
(425) 889-9300

The Real Houswives of Wall Street

You won't believe this. By the way, Matt Taibbi is a terrific author - check out his book 'Griftopia'.

Visit msnbc.com for breaking news, world news, and news about the economy