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 Foreclosure: step-by-step CENTS. Foreclosure Warning Signs  Unexpected Life Changes:  Loss of employment or change in income  Illness/injury  Divorce/seperation.

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Presentation on theme: " Foreclosure: step-by-step CENTS. Foreclosure Warning Signs  Unexpected Life Changes:  Loss of employment or change in income  Illness/injury  Divorce/seperation."— Presentation transcript:

1  Foreclosure: step-by-step CENTS

2 Foreclosure Warning Signs  Unexpected Life Changes:  Loss of employment or change in income  Illness/injury  Divorce/seperation  Death of a spouse  Financial:  Changes in mortgage payment  Maxed out credit cards  Using credit for daily expenses  Late payments  Minimum payments to credit cards  Opening new lines of credit after maxing out other cards  Choosing which bills/expenses to pay

3 Mortgage Delinquency:  Mortgage Delinquency: failure to make mortgage payments on time or in full  Late Payment(s)  Collections  Loss Mitigation

4 Foreclosure Process: *Washington  Foreclosure laws and timelines differ by state  Washington State:  Foreclosure Fairness Act of 2011 (FFA): RCW 61.24  Judicial v. Non-Judicial foreclosure  Judicial Foreclosure: requires court action to foreclose a home  Non-Judicial Foreclosure: procedure used when a Deed of Trust secures the home loan  Washington has a non-judicial process for the vast majority of home loans  Steps/Stages: Pre-Foreclosure, Notice of Default, Mediation, Notice of Trustee’s Sale, and Trustee Sale

5 Foreclosure Timeline

6 Pre-Foreclosure  Pre-Foreclosure occurs after the homeowner has defaulted on a mortgage payment  Notice of Pre-Foreclosure Options (NOPFO): notice to homeowner  Includes right to “meet and confer”  Right to discuss foreclosure alternatives  Homeowner response within 30 days of notice – gives an additional 60 days to meet and confer with servicer or lender  If homeowner does not respond within 30 days, the servicer or lender may send the Notice of Default

7 Notice of Default  Notice of Default: sent to homeowner if  No resolution during “meet and confer”; or  No response to NOPFO within 30 days  Gives the option to request Mediation  Mediation request must be made through a HUD-certified housing counselor or an attorney  Must be sent 30 days before Notice of Trustee’s Sale can be served or recorded

8 Mediation: What is it?  What is it?  Face-to-face discussion between homeowner, lender, and neutral 3 rd party  Discuss alternatives to foreclosure  Both parties must act in Good Faith  Lender’s rep has authority to modify loan  Mediator has been provided with all necessary documentation by parties  Mediation fee has been paid ($400 – each party pays $200)  Homeowner or authorized rep attends mediation  Lender may not proceed with foreclosure until mediation has concluded

9 Mediation Documentation  The mediator will specify the required documentation  Homeowner will typically need to provide:  Most recent paystubs  Documentation of debts and other obligations  2 years of tax returns  Lender will typically need to provide:  Note and Deed of Trust  Proof of ownership of Note  Loan balance  List of fees and charges  Payment history  Present value of home and other loan modification information

10 Mediation Timeline  May be requested from time Notice of Default is received, up to 20 days after Notice of Trustee Sale was recorded  Department of Commerce (DOC) notifies parties mediation was requested within 10 days of request  Mediation fee must be paid within 30 days of DOC’s notice  Homeowner documentation sent to lender and mediator within 23 days of DOC notice  Lender documentation sent to homeowner and mediator within 20 days of receipt of homeowner’s documentation  Mediation is within 70 days of mediator selection (DOC selects)  Mediation date/time is set 30 days prior to mediation  Mediation session runs 1-3 hours

11 Post-Mediation  Mediator issues certificate of results and good faith within 7 days post mediation  If an agreement is NOT reached:  Upon issuance of mediator’s certificate or 17 days post-mediation, the lender may proceed with foreclosure  If an agreement is reached:  Foreclosure is avoided

12 Per se Consumer Protection Act violations  What if the lender does not act in good faith during mediation?  Not-in-good-faith mediation certificate  Per se Consumer Protection Act violation: the homeowner may sue to enjoin (stop) the Trustee Sale.

13 Notice of Trustee’s Sale  Must be recorded by the trustee at least 120 days prior to sale  Must be recorded in the county where the property is located  Trustee must provide notice (service or posting) at least 90 days prior to sale  Must be published 2 times  1 st Publication: between 28-35 days prior to sale  2 nd Publication: between 7-14 days prior to sale

14 Trustee Sale  Trustee Sale: the auction of the property  Must occur on a Friday or if Friday is a legal holiday, the sale will occur on the following Monday.

15 What’s the best option for you?  Stay in your home?  Communicate with your servicer/lender to discuss options  Seek mortgage assistance  Mediation  Bankruptcy  Leave the home?  Sell  Work-out: Short Sale or Deed in Leiu  Assumption  Allow the home to foreclose

16 Protections & Consequences  Mediation process in Washington provides borrowers at risk of foreclosure with:  More notice, time, and options  Consumer Financial Protection Bureau (CFPB): federal agency tasked with implementing reforms to the mortgage servicing industry  Restricted Dual Tracking  Notification  Access to servicing personnel  Fair review process  No foreclosure until alternatives are considered  Taxes: *Mortgage Forgiveness Debt Relief Act (applies to cancelled debt 2007-2013)  cancelled debt does not have to be claimed as taxable income – up to $2 million  Negative impact on Credit Score:  Delinquency, short sale, deed-in-lieu, & foreclosure

17 Common Mistakes  Ignoring calls/letters from your servicer or lender  Throwing away correspondence from your servicer or lender  Not seeking out a HUD-certified housing counselor  Falling victim to scams

18 Best Practices  Keep lines of communication open with your servicer/lender  Open and read any letters  Keep all notices and correspondence (including the envelope)  Work with a HUD-certified housing counselor  Know the warning signs of a scam: if you suspect a scam – report it!  A housing counselor requiring a fee  Claims of a “special relationship” with servicers/lenders  Guarantees to resolve foreclosure issues  Discouraging communication with your servicer/lender  High pressure tactics to sign paperwork, sell property, transfer ownership  Advises to direct mortgage payment to the housing counseling business

19 Resources   1-888-995-HOPE (4673)  Washington Homeownership Center   1.877.894.HOME (4663)

20  Questions?

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