stepbystep CENTS Foreclosure Warning Signs Unexpected Life Changes Loss of employment or change in income Illnessinjury Divorce seperation Death of a spouse Financial Changes in mortgage payment ID: 287835
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Slide1
Foreclosure:step-by-step
CENTSSlide2
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 paySlide3
Mortgage Delinquency:
Mortgage Delinquency: failure to make mortgage payments on time or in full
Late Payment(s)
Collections
Loss MitigationSlide4
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 SaleSlide5
Foreclosure TimelineSlide6
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 DefaultSlide7
Notice of Default
Notice of Default: sent to homeowner if
No resolution during “meet and confer”; or
No response to NOPFO within 30 days
G
ives 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 recordedSlide8
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 concludedSlide9
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
P
resent value of home and other loan modification informationSlide10
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 hoursSlide11
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 avoidedSlide12
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.Slide13
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 Slide14
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.Slide15
What’s the best option for you?
Stay in your home?
Communicate with your servicer/lender to discuss options
Seek mortgage assistance
www.makinghomeaffordable.gov
Mediation
Bankruptcy
Leave the home?
Sell
Work-out: Short Sale or Deed in
Leiu
Assumption
Allow the home to forecloseSlide16
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, & foreclosureSlide17
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 scamsSlide18
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 businessSlide19
Resources
www.makinghomeaffordable.gov
1-888-995-HOPE (4673)
Washington Homeownership Center
www.homeownership.wa.gov
1.877.894.HOME (4663
)Slide20
Questions?