Posted on Wednesday, December 1, 2010
In another attempt to save struggling homeowners from avoidable evictions, Washington, D.C. Mayor Adrian M. Fenty signed on Thursday an act called “Saving DC Homes From Foreclosure Emergency Act of 2010.”
This act amends several sections of the District of Columbia Official Code.
Most prominent in the act is the addition of a “foreclosure mediation” section, which has specific requirements banks must meet before proceeding with a foreclosure.
These requirements detail a lengthy process lenders must follow in order for foreclosures to be considered valid. Foreclosure sales resulting from a process that skipped a step or proceeded incorrectly will be considered void.
Along with a notice of default to a delinquent borrower,
lenders now must send information regarding a mediation process that the borrower can opt to participate in to try to keep his home.
The borrower must opt to participate in the mediation process within 30 days of receiving the information in the mail, by returning the necessary forms and paying a $50 fee.
A mediation administrator will schedule a mediation session soon after the borrower opts into the program. The mediation session will be conducted by the administrator and the lender and borrower or their representatives must attend the meeting. The lender will be charged fines of $500 for missing the meeting or failing to bring required documents.
If the borrower misses the meeting, the matter will be terminated and lenders may proceed with the foreclosure.
This process adds even more steps to the already confusing and lengthy process of foreclosure.
Though efforts to find alternatives to foreclosure are commendable and often beneficial to lenders as well, some believe the extra rules and the threat of invalid foreclosure sales are extreme.
“This bill was not thoughtfully constructed,” said Jeffery Fisher, an attorney with D.C. area firm the Fisher Law Group. “There are a lot of interpretation issues, and there are provisions that demonstrate a lack of familiarity with the foreclosure process.” By: Joy Leopold