D.C. Attorney General Issues Statement of Enforcement to Combat Foreclosure

November 22, 2010

On October 27, 2010, Washington, D.C. Attorney General Peter Nickles issued a Statement of Enforcement regarding deceptive foreclosure sale notices.

Foreclosure sale notices, when sent to homeowners to commence foreclosures of their homes, violate the District’s Consumer Protection Procedures Act if they have a tendency to mislead homeowners either by misrepresenting a material fact or by failing to state a material fact. D.C. Official Code § 28-3904 (e) and (f).

The Attorney General is responsible for bringing enforcement actions in D.C. Superior Court against violations of the Consumer Protection Procedures Act and is authorized to seek injunctive relief, consumer restitution, and civil penalties. D.C. Official Code § 28-3909.

A foreclosure proceeding in D.C. begins when an owner of real property is sent a notice of foreclosure sale on a form prescribed by regulation and issued by the Recorder of Deeds. 9 DCMR §§ 3100.1 and 3100.2. The Notice of Foreclosure Sale form requires identification of, among other things, a “Security Instrument recorded in the land records of the District of Columbia,” a “Maker(s) of the Note secured by the instrument,” and a “Holder of the Note.” The “Holder of the Note” is the noteholder whose security interest in the real property is the basis for the foreclosure proceeding.

Under District law, a noteholder’s security interest in real property should be reflected in the property records maintained by the Recorder of Deeds, even if the noteholder was not the original maker of the note. In contrast to the laws of many states, District law imposes a recordation obligation on each transferee of a security interest in real property:

“Within 30 days after the execution of a deed or other document [by which] an economic interest [or] a security interest in the real property is conveyed, all transferees of, and all holders of the security interest in, real property shall record a fully acknowledged copy of the deed or other document . . . with the Recorder of Deeds for the District of Columbia.” D.C. Official Code § 47-1431(a).

While most assignments of security interests “from one lender to another, on the secondary market” are expressly exempted from the District’s recordation tax, D.C. Official Code § 42-1102.01, these assignments are not exempted from the District’s basic recordation requirement, which is presumed to apply to every transfer of an economic or security interest in real property. D.C. Official Code § 47-1432.

When a homeowner receives the notice of foreclosure sale on the form required by District law, the notice is representing to the homeowner, at least by implication, that (1) the identified “Holder of the Note” in fact has a security interest in the homeowner’s property and (2) the noteholder’s security interest is duly “recorded in the land records of the District of Columbia.” The homeowner who receives such a notice is entitled to presume that the recordation of the security interest complies with District law, and that each intermediate transfer of the security interest between the original maker of the note and the current holder of the note is documented in the public record.

If the land records of the District of Columbia don’t in fact demonstrate that the “Holder of the Note” identified in the foreclosure sale notice has the security interest identified in the notice, then use of the required notice form is misleading. The notice misrepresents to the homeowner that the noteholder has a recorded security interest and fails to disclose the material fact that the “recorded” security interest described in the notice is not that of the noteholder. Homeowners who receive such notices may fail to take prudent steps to protect their homes, such as seeking legal advice to determine whether there may be a basis for challenging the foreclosure proceedings in court. In the District, as in other jurisdictions with a non-judicial foreclosure process, the onus is on the homeowner to develop facts supporting judicial review.

Misrepresenting to homeowners that noteholders’ security interests are recorded in the District’s land records violates the Consumer Protection Procedures Act, even if the security interests are tracked in the Mortgage Electronic Registration Systems (MERS) registry. The MERS registry, which is privately maintained and fully accessible only to paying members and subscribers, does not allow users to research the intermediate transfers between the original maker of the note and the current holder of the note. Therefore, in contrast to the public recordation system prescribed by District law, the MERS registry does not allow users to confirm that reported noteholder interests are supported by a chain of conveyances originating with the maker of the note.

Prior to initiating a foreclosure involving a District of Columbia homeowner, a trustee or noteholder is obligated to confirm that the District’s land records demonstrate that the noteholder has the security interest that will be listed in the foreclosure sale notice. Each assignment of interest (or other document) by which the security interest was transferred to the noteholder, or to one of the noteholder’s predecessors in the chain of conveyances from the maker of the note, must be recorded with the Recorder of Deeds. A document that lists MERS as a nominee, but does not identify the actual holder of the security interest, will not suffice.

If homeowners or their advocates provide information to the Washington, D.C. Office of the Attorney General establishing that foreclosures continue to be commenced or pursued with deceptive foreclosure sale notices, the Attorney General may bring enforcement actions under the Consumer Protection Procedures Act to enjoin foreclosure proceedings, secure restitution for injured homeowners, and seek appropriate civil penalties.

To report the continued use of deceptive foreclosure sale notices, call the Attorney General’s Consumer Hotline at (202) 442-9828.


Fannie Mae Launches Distressed Borrower Education Site

August 9, 2010

 

Fannie Mae launches a borrower-facing outreach site designed to educate distressed homeowners on potential retention strategies and foreclosure alternatives.

The online education resource — available in both English and Spanish — offers calculators to demonstrate to borrowers the mechanics of refinance, repayment, forbearance, and modification options if the borrowers would like to keep their home. In addition, it covers information on Fannie’s Deed-For-Lease program, which allows borrowers to become renters in the same property after pursing deed-in-lieu of foreclosure.

For borrowers who would like to leave their home, the online education resource offers possible options such as, a short sale and deed-in-lieu of foreclosure when you can no longer stay in your home but want to avoid foreclosure.

For borrowers who aren’t sure what the best option is for them, the Options Finder can assist you. By answering some questions, the Options Finder determines which option may be right based on your current situation.

When you need additional assistance, the Resources section offers the following and much more:

Fannie Mae Resources

Review what Fannie Mae is doing to assist homeowners and how they can help you.

Contact your Mortgage Company

Find and contact your mortgage company to discuss your situation.

Helpful Forms

Download forms to help you prepare for (and keep track of) working with your mortgage company or a housing counselor.

Calculators

Use the calculators to determine which scenario fits your needs.

Frequently Asked Questions

Search for helpful answers to some of the most common questions regarding your options.

Take Action – What You Should Do Next

Once you ‘ve learned about options that may be available for your situation, it’s time to take action.

Step 1: Research

Be sure to bookmark the page and print the information on the option(s) that applies best to your situation. You will want to refer to this information when speaking with your mortgage company.

Step 2: Gather

Gather the information shown below. You’ll need this information handy so you can refer to it during your discussion with your mortgage company. Use the Financial Checklist to help get organized and prepared.

  • Your mortgage(s): Loan number, past due notices, monthly statement, etc. for your first mortgage and second mortgage or other liens (if applicable).
  • Your other debts: Copies of bills and monthly statements for all other debts such as credit cards, personal loans, auto loans, utilities, etc.
  • Your income: Paystubs, unemployment benefits letter, alimony, child support, etc. for all borrowers on the mortgage.
  • Your hardship: Explain your situation and any hardship that has affected your income or ability to make your payments, etc.

Step 3: Contact

Contact your mortgage company and ask them about the options that are available for your specific situation. Also ask for the name and/or employee number of the mortgage specialist who is helping you and be sure to give them your up-to-date contact information. Use the Contact Log to keep track of your conversations and follow-up items.

Step 4: Discuss

Make sure you are ready to discuss everything about your current situation—the more the mortgage company understands and the more accurate the information, the more they can help you find the right option.

Step 5: Confirm

Ask them to confirm your current situation to be certain there are no other issues. Make sure you understand the next steps involved and if there is anything you will need to complete for the specific option.


Bank of America Short Sale Requirements

June 14, 2009

Bank of America

Bank of America (now merged with Countrywide) is now requesting the following documents for a short sale:

  • A signed letter of hardship
  • Verification of all sources of income (including 30 days paystubs). If self employed, provide profit and loss statement
  • If Bank of America doesn’t pay your homeowners insurance and property taxes, provide proof of insurance, and paid copies of tax receipts
  • A copy of signed purchase offer/sales contract
  • Estimate of net proceeds on HUD-1
  • A written description of any liens on the property

To expedite the review and approval process we suggest that you return the requested information via:

***Overnight Mail or Priority Mail to:***

Bank of America Mortgage
475 Cross Point Parkway
Getzille, NY 14068-9000
Loss Mitigation Department
Fax# 716-635-7255


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