LIEB BLOG

Legal Analysts

Showing posts with label Mortgage. Show all posts
Showing posts with label Mortgage. Show all posts

Wednesday, November 10, 2021

Foreclosure Alert - Lenders Required to Provide Single Point of Contact to Borrowers

Starting January 2, 2022, borrowers negotiating a loan modification have a right to a single point of contact at their lender.


On November 3, 2021, Governor Hochul signed BillS671 into law, which amends Section 6-o to the banking law, and starting on January 3, 2022, upon written request by the borrower, lenders will be required to provide borrowers with a single point of contact who must provide accurate account and other information related to the foreclosure process and loss mitigation efforts.


This is huge because many mortgage modifications are functionally blocked by a lack of access to lenders rather than based upon qualification criteria. As the foreclosure moratorium is coming to an end on January 15, 2022 and a wave of foreclosures are about to hit New York State, this is a needed law for borrowers, and their attorneys, to settle cases.




Friday, July 02, 2021

New Foreclosure Rule from CFPB

On June 28, 2021, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending Regulation X of the Real Estate Settlement Procedures Act (RESPA) which aims to assist mortgage borrowers with a COVID-19 related hardship in seeking loss mitigation options and delaying foreclosure proceedings to encourage resolution of delinquencies through loan modification.
This Rule is going to make it harder for lenders to foreclose and cause more homeowners to enter a modification thereby avoiding foreclosure.

The Rule has 5 key parts:

  1. It imposes additional requirements before a mortgage servicer may make the first notice or filing required to commence a foreclosure proceeding due to default.
    • However, this requirement is only applicable if:
      • The borrower’s mortgage payment became more than 120 days delinquent on or after March 1, 2020; and
      • The statute of limitations applicable to the potential foreclosure action expires on or after January 1, 2022.
    • If the rule is applicable, mortgage servicers may commence a foreclosure only if:
      • The borrower has submitted a completed loss mitigation application and either:
        • The borrower is ineligible for any loss mitigation options and the borrowers’ appeal, if applicable, has been denied;
        • The borrower rejects all available options; or
        • The borrower fails to perform terms of an agreement on a loss mitigation option;
      • The subject property is abandoned as defined, under state or municipal law; or
      • The servicer has conducted specified outreach and the borrower is unresponsive to such outreach.
    • This requirement expire on January 1, 2022, and thus, mortgage servicers shall be free to commence foreclosure proceedings after such date.
  2. It provides specific limitations for loan modifications, including:
    • A modification may not cause an increase in mortgage principal and interest payments, and may not extend the life of the loan by more than 480 months from the date of the loan modification;
    • A loan modification may not charge or accrue interest on deferred payments, which are not due until the mortgage loan is refinanced, the property is sold, the loan modification matures, or the mortgage insurance is terminated (if the loan is insured by FHA);
    • Modification MUST be made available to borrowers experiencing COVID-19 related hardships;
    • Borrower’s acceptance of a permanent modification, after a trial modification plan, ends any preexisting delinquency on the mortgage; and
    • No fees may be charged in connection with a modification and all existing late charges, penalties, stop payment fees, or similar charges incurred on or after March 1, 2020, shall be waived.
  3. Imposes additional live contact early intervention obligations on servicers to discuss specific COVID-19 related relief:
    • Applies to:
      • A borrower who is not in a forbearance program; or
      • A borrower who is near the end of a forbearance program based on a COVID-19 related hardship.
      • These requirements expire on October 1, 2022.
  4. Requires the servicer to contact the borrower, within 30 days before the end of the forbearance period, if the borrower remains delinquent, and inquire if the borrower wants to complete a loss mitigation application.
  5. Defines COVID-19-related hardship to mean “a financial hardship due, directly or indirectly, to the national emergency for the COVID-19 pandemic declared in Proclamation 9994 on March 13, 2020 (beginning on March 1, 2020) and continued on February 24, 2021, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)).”

The Rule does not take effect until August 31, 2021. That being said, borrowers should be aware that the CFPB foreclosure moratorium expired on June 30, 2021 and the CDC foreclosure moratoriums for FHA, HUD, VA, Fannie Mae, and Freddie Mac loans ends on July 31, 2021 and to contact their mortgage servicers as soon as possible to inquire about available loss mitigation options.


Wednesday, June 30, 2021

New Foreclosure Compliance Rules in Town of Southampton

The Town of Southampton has issued a new compliance protocol (Town Code at Chapter 262) for Foreclosure Plaintiffs in response to an increase in crime and deterioration in property appearance. 

The new law sets forth a Registration Scheme with new maintenance obligations:

  • Homes are to kept free and clear of weeds, overgrown brush, trash, dead vegetation, debris, etc.
  • No graffiti
  • Requirements for watering, irrigation, cutting and mowing of lawn
  • Pools and spas to be clear of pollutants and debris
Properties subject to foreclosure must be properly secured in order to avoid unauthorized access:

  • Locked windows, doors, and gates
  • Repairs to broken windows, doors, and gates
  • Designation of a property manager to maintain and perform necessary work

Penalties & Fines include:

  • $1,000 fine or up to 15 days in jail (or both), for each violation
  • $1,000-$5,000 fine or up to 15 days in jail (or both) for a second or subsequent violation
  • $150 for first day of violation, $250 for second day of violation, $500 for third day of violation and continuing.
Will the new registration requirements really increase the value of neighborhoods and decrease crime and deterioration? 






Thursday, June 03, 2021

Co-op Loans At-Risk Based on Legislation that Passed the US House

A law that passed the House in May and is before the Senate (The Comprehensive Debt Collection Improvement Act or “CDCIA”could force lenders to slam the breaks on issuing mortgages to co-op purchasers.

This law reverses a 2019 decision from the US Supreme Court, Obduskey V. McCarthy, and would cause the Fair Debt Collection Practices Act (FDCPA) to apply to businesses engaged in non-judicial foreclosures, which applies to co-op mortgage loans.

In other words, the CDCIA would hamstring co-op lenders' ability to utilize third-parties to collect their loans (e.g., the law limits the number of times a debtor may be reached, it requires that contact be ceased when the debtor so requests, it creates tons of exposure to damages and attorneys' fees, etc.). It would also suppress important information from a credit report, such as forbidding credit scoring models from using medical debt as a negative factor.

As you can certainly deduce, if the CDCIA passes the Senate and is signed by the President, lenders will likely have stricter qualification terms and may even raise rates on co-op mortgage loans that qualify.

Are the protections in the CDCIA worth the law's chilling effect on co-op loans? Should the Senate change the law? Should it just vote it down?


Do you think the CDCIA will lead to fewer co-op transactions?




Wednesday, February 10, 2021

You Know That Your Mortgage Payoff # Is Wrong - What Should You Do?

Here is the scenario - You are trying to sell a property and you order a payoff from your mortgage company, but that payoff quote comes in much higher than you believe that it should. 


You are in a real bind. 


You need to sell, but you don't want to overpay. What should you do?


This is particularly problematic where you are in default on your mortgage and the lender has started tacking on exorbitant penalties and attorneys' fees.


The answer is that you better protest the payoff, in writing, while requesting an itemization and then, you should pay it anyway. 


If you do, you can then file a motion for an accounting and ask the court to compute the appropriate fees, charges, expenses, and other payments due under the mortgage. 


If you don't, your motion to the court for an accounting will probably be denied in light of the voluntary payment doctrine, equitable estoppel, and waiver bar the accounting.


Again, protest and pay is the strategy based upon the appellate court decision in US Bank v. Cordero


Are you selling a house in foreclosure? If so, pay attention.