The District of Columbia adopted the attached "emergency" regulations
applicable to the foreclosure mediation rights and procedures established
for the exercise of power of sale of a residential mortgage in the
District, pursuant to the "Saving D.C. Homes from Foreclosure Amendment
Act of 2010" (discussed in our prior updates, below).
The regulations require the completion of forms for certain activities
covered by the Act, which requirements shall be satisfied solely through
the use of forms provided with the attached regulations.
Among other things, the emergency regulations provide that a Notice of
Intention to Foreclose a Residential Mortgage shall be null and void with
respect to a foreclosure of a residential mortgage unless a Notice of
Default on Residential Mortgage (Form FM-1) is mailed to each borrower,
and the lender receives and records a Mediation Certificate provided
pursuant to the regulations.
The emergency regulations set forth the procedures for filing an Affidavit
of Non-Residential Mortgage Foreclosure in order to issue and record a
Notice of Foreclosure for the foreclosure of a mortgage other than a
residential mortgage for which a Mediation Certificate is not required to
be recorded. The emergency regulations exclude foreclosure by a
condominium association against an owner, or housing cooperative
association against a member, when the foreclosure is brought for a reason
other than a default on a residential mortgage.
This emergency rulemaking became effective on May 25, 2011. The
regulations will remain in effect for up to one hundred and twenty (120)
days after the date of adoption (May 25, 2011), unless earlier superseded
by a notice of final rulemaking.
Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com
http://www.mtwllp.com
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________________________________
From: Ralph Wutscher
Sent: Thursday, November 18, 2010 4:34 PM
To: Ralph Wutscher
Cc: dcoffice@kw-llp.com; socaloffice@kw-llp.com; Chicago Office
Subject: FYI: DC Mayor Signs New Foreclosure Mediation Legislation Into
Law
The DC Mayor signed into law the emergency legislation (Saving DC Homes
from Foreclosure Emergency Act of 2010) referenced in our prior update
below.
Attached is a copy of the legislation as signed by the Mayor.
Our understanding is that Judge Wright of the DC Superior Court is holding
a private meeting on December 2, 2010 with officials from the DC Attorney
General's Office, the DISB (the DC Department of Insurance, Securities and
Banking) and the D.C. Council to discuss how foreclosures will proceed in
DC. We will try to report on the results of that meeting as soon as
possible.
Let me know if you have any questions. Thanks.
Ralph T. Wutscher
Kahrl Wutscher LLP
The Loop Center Building
105 W. Madison Street, Suite 2100
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (866) 581-9302
Mobile: (312) 493-0874
Email: RWutscher@kw-llp.com
http://www.kw-llp.com
NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.
Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com
________________________________
From: Ralph Wutscher
Sent: Monday, November 15, 2010 8:50 PM
To: Ralph Wutscher
Cc: dcoffice@kw-llp.com; socaloffice@kw-llp.com; Chicago Office
Subject: FYI: DC Approves New Foreclosure Mediation Law (CORRECTION)
Please note that our DC Office remarks that the news reports on this
legislation were actually not completely correct, in that: (1) this
emergency legislation still needs to be approved by the DC Mayor; and (2)
the legislation approved by the Council on an emergency basis does not
contain the rental provisions.
A copy of the emergency legislation that was transmitted to the Mayor
today is attached.
From a procedural standpoint, the emergency legislation has not yet
technically become law. It was officially transmitted to the Mayor today,
who has ten days to sign it, veto it, or take no action and thereby allow
it to become law. The current Mayor, Adrian Fenty, is unlikely to veto the
legislation, and his term ends at the end of this year.
Moreover, the incoming Mayor, Vincent Gray, takes office on January 2,
2011. He was one of the original sponsors of the precursor to this bill,
the "Saving D.C. Homes from Foreclosure Act of 2010," which was introduced
in March of 2010, and recently approved in one of the Council's
committees. That bill is substantially similar to the one recently passed
by the emergency legislation, but includes a rental obligation that is NOT
in the emergency legislation, as described below.
The actual bill that was passed last week was the "Saving D.C. Homes from
Foreclosure Emergency Act of 2010." The emergency legislation was
introduced last week after the DC Council issued its nonbinding resolution
that the proposed foreclosure mediation legislation needed to become
emergency legislation.
The importance of this being "emergency" legislation is that it can only
exist for 90 days following signature or non-action by the mayor, or an
override of an unlikely mayoral veto. The purpose of emergency legislation
is to by-pass the normal procedures for additional hearings by the DC
Council, and, more importantly, the 30 day review period by the United
States Congress that is required under D.C.'s Home Rule Act for any
legislation to take effect in the District.
It is unclear how the legislation will take effect during this 90 day
"emergency" period, since the legislation itself contemplates that both
the Mayor and the Commissioner of the Department of Insurance, Securities,
and Banking ("DISB") will need to take subsequent action to promulgate
forms for use in the mediation process and prescribed loss mitigation
documents. Moreover, the emergency legislation would require the
Commissioner of the DISB to appoint a Mediation Administrator who will
have to create further forms and procedures for the required mediation.
Given the transition in government in January, we expect that these forms
and procedures will be created by a lame duck administration.
Third, the rental obligation is NOT part of the emergency legislation,
though it is part of a more permanent bill (B18-0691) likely to eventually
be passed through normal legislative processes and will likely be signed
by the incoming Mayor.
The rental obligation was discussed by the current DISB commissioner on
June 14, 2010 at a hearing of the Committee of Public Services and
Consumer Affairs. In her testimony, the Commissioner objected to the
bill's language on the rental option because she felt that the legislation
should more closely mirror similar provisions being debated in the U.S
House of Representatives and in the Arizona State Legislature. Those
provisions only required rental options for loans originated before July
1, 2007; require the homeowner to have lived in the home for at least two
years; and only for low-cost homes that were purchased at less than the
median purchase price for homes in the District of Columbia. She also
recommended increasing the proposed rental period to 5 years, requiring a
demonstration that the borrower can pay the market rent, and streamlining
the process for the lender to gain possession of the property in order to
avoid having each foreclosure lead to a mandatory tenancy ending up in
Landlord-Tenant Court. She raised concerns about creating disincentive
for mortgage lenders to do business in the District.
We believe this is why the emergency bill omits the rental option
requirement, which will likely resurface next year, given the fact that
the incoming Mayor was one of the sponsors of the legislation proposing
the rental requirement.
Let me know if you have any questions. Thanks.
Ralph T. Wutscher
Kahrl Wutscher LLP
The Loop Center Building
105 W. Madison Street, Suite 2100
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (866) 581-9302
Mobile: (312) 493-0874
Email: RWutscher@kw-llp.com
http://www.kw-llp.com
NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.
Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com <blocked::http://updates.kw-llp.com/>
________________________________
From: Ralph Wutscher [mailto:rwutscher@kahrlwutscherllp.com]
Sent: Monday, November 15, 2010 4:53 PM
To: 'Ralph Wutscher'
Cc: 'dcoffice@kw-llp.com'; 'socaloffice@kw-llp.com'; 'Chicago Office'
Subject: FYI: DC Enacts New Foreclosure Mediation and Lease-back Law
The Council of the District of Columbia approved by emergency resolution
the "Saving DC Homes from Foreclosure Act of 2010," which among other
things requires that borrowers be provided with opportunity for
pre-foreclosure mediation for residential loans, and a rental option for
foreclosed borrowers.
A copy of the language of the Act is available at:
http://www.dccouncil.washington.dc.us/images/00001/20100304161224.pdf
<http://www.dccouncil.washington.dc.us/images/00001/20100304161224.pdf>
A copy of the Emergency Resolution is available at:
http://www.dccouncil.washington.dc.us/images/00001/20101108140041.pdf
<http://www.dccouncil.washington.dc.us/images/00001/20101108140041.pdf>
Various media reports suggest that the new law will slow foreclosures by
four to six months.
Mediation Notice:
The new law requires that, after a notice to foreclose a residential
mortgage has been given, the servicer and borrower must "engage in
mediation" prior to the foreclosure of any residential mortgage or deed of
trust.
Under the new law, residential servicers are prohibited from foreclosing,
unless the servicer provides certain contact information and other
documents, including a meditation request form, with the notice of default
and election to sell.
Prior to foreclosing, the servicer must also provide a copy of the notice
to the "Mediation Administrator" (the Department of Insurance, Securities
and Banking, or its designee), and record a certificate to be provided by
the Mediation Administrator regarding an exemption from mediation, or the
completion of the mediation.
The borrower or record title owner has 30 days after service of the
mediation notice to mail the completed mediation request form to the
Mediation Administrator. The foreclosure may not move forward until the
mediation is complete, or the borrower or record title owner submits a
written waiver of mediation and the Mediation Administrator issues an
exemption certificate.
Mediations will be conducted by a senior justice, judge, hearing master or
other designee pursuant to rules yet to be adopted.
The borrower or record title owner requesting the mediation, as well as
the beneficiary of the deed of trust, or their representatives authorized
to negotiate a loan modification, must attend the mediation.
If the beneficiary fails to attend the mediation, fails to participate in
the mediation in good faith, or does not bring to the mediation certain
required documents, or does not have the authority or access to a person
with the authority to negotiate a loan modification, the mediator shall
recommend the imposition of sanctions against the beneficiary or
representative.
The court may issue sanctions as the court determines appropriate,
including, requiring a loan modification in the manner determined proper
by the court.
If the borrower or record title owner request a mediation, but then fail
to attend the mediation, the Mediation Administrator shall provide to the
trustee a certificate which states that no mediation is required in the
matter.
If the mediator determines that the parties, while acting in good faith,
are not able to agree to a loan modification, the mediator shall prepare
and submit to the Mediation Administrator a recommendation that the
matter be terminated. The Mediation Administrator shall provide to the
trustee a certificate which provides that the mediation required by this
section has been completed in the matter.
The Department of Insurance, Securities and Banking will be establishing a
total fee of not more than $1,000 that may be charged and collected by the
Mediation Administrator for mediation services pursuant to this section
and providing that the responsibility for payment of the fee must be
shared equally by the parties to the mediation.
The new provisions do not apply if: (1) the borrower or record title
owner surrendered the property, as evidenced by a letter confirming the
surrender or delivery of the keys to the property to the trustee, the
beneficiary of the deed of trust or the lender, or an authorized agent
thereof; or (2) the borrower or record title owner are in bankruptcy.
Rental Option Notice:
The new law also mandates a fair-market-value rental option for former
homeowners.
Under the new law, a foreclosure may not be commenced or executed before
the expiration of the 28-day period beginning upon the receipt, by the
borrower, of clear written notice among other things of: (1) certain
information regarding the default and the anticipated foreclosure; and
(2) the borrower's new right, notwithstanding foreclosure, to continue to
occupy the foreclosed property, and sets forth the terms of such
occupancy.
Occupancy by a borrower of a foreclosed property shall be under a periodic
month-to-month tenancy, not to exceed 12 consecutive months of tenancy,
pursuant to a standardized lease agreement to be issued by the DC Mayor's
office, under which the owner of the property may terminate the tenancy
for material breach, subject to certain limitations.
The new law provides for exemption, if the servicer has in place an
alternative similar plan.
The fair market rent for a foreclosed property shall be the amount that is
determined by an independent licensed appraiser, and, shall be adjusted
annually.
Let me know if you have any questions. Thanks.
Ralph T. Wutscher
Kahrl Wutscher LLP
The Loop Center Building
105 W. Madison Street, Suite 2100
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (866) 581-9302
Mobile: (312) 493-0874
Email: RWutscher@kw-llp.com
http://www.kw-llp.com
NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.
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http://updates.kw-llp.com
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