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FHFA Extends Foreclosure, Eviction Moratorium Through the End of the Year

Posted By USFN, Thursday, August 27, 2020

The Federal Housing Finance Agency (FHFA) announced August 27 that Fannie Mae and Freddie Mac will be extending their moratorium on foreclosures and evictions at least through the end of 2020. This is the third time the FHFA has extended the expiration date, after first announcing in May that the moratorium would expire on June 30 and then extending it through August 31.

The move is a continuation of a directive from the FHFA, in which Fannie Mae and Freddie Mac were originally instructed on March 18 to suspend foreclosures and evictions for at least 60 days. The FHFA had enacted the first moratorium in response to the national emergency that was declared on March 13 by President Trump due to the COVID-19 outbreak.

Additional industry, state and regional announcements related to changes in deadlines and regulatory requirements as a result of COVID-19 may be found on USFN's COVID-19 Industry Announcements and Headlines page. 

 

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Strict Compliance Required for Alabama Default Notices

Posted By USFN, Monday, August 17, 2020

by Andy W. Saag, Esq.
Tiffany & Bosco, P.A.
USFN Member (AL, AZ, CA, FL, NM, NV)

Barnes v. U.S. Bank National Association, as Trustee for NRZ Pass-Through Trust V
; Alabama Court of Civil Appeals Case No. 2180699

What did the case say?
On June 26, 2020, the Alabama Court of Civil Appeals voided a foreclosure sale finding that the notice of default (the “notice”) sent to the borrowers prior to the foreclosure sale failed to strictly comply with the notice provisions in the mortgage. Among other requirements, the mortgage required the notice to “further inform Borrower of . . . the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale.” However, the servicer’s notice stated, “You may have the right to assert in court the non-existence of a default or any other defense to acceleration or foreclosure." The court found that the servicer’s notice did not strictly comply with the notice provisions in the mortgage in at least two respects. First, the notice contained no reference to a right to affirmatively seek relief in a court action directly challenging the foreclosure. Second, the reference in the notice was not unequivocal because it referred to what rights Barnes "may" have. Accordingly, the court found the foreclosure sale was void.

What impact will this case have?
Barnes is not the first case in Alabama to require strict compliance with the notice/breach provision in the mortgage. The strict-compliance concept of the default notice was first highlighted in 2012 in Jackson v. Wells Fargo Bank, N.A. 90 So.3d 168 (2012).  Then, in 2017, the Alabama Supreme Court invalidated a foreclosure sale because the notice of default letter did not strictly comply with the notice/breach provision in the mortgage. Ex Parte Turner, 254 So. 3d (Ala. 2017). After Turner, many servicers initiated a review of their notice of default letters to ensure strict compliance. Based on this review, most servicers made changes to ensure strict compliance on future notice letters. Accordingly, it is possible the Barnes decision will not have an enormous impact on the industry. Given an uncontested foreclosure in Alabama generally does not take longer than a few months, it is likely that many active foreclosure and REO properties originated after the review following Turner, and thus, likely do not have the same issues as we saw in Barnes.* Of course, the best defense is to make certain the default letter strictly complies with the terms of the mortgage on the front end so that it never becomes an issue on the back end. Furthermore, because the requirement to send default notice letters is purely contractual, changing or eliminating the notice requirements on the mortgage itself would clearly help mitigate any future challenges.

*The Notice in Barnes was sent prior to the publication of the Turner decision.

 

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August 2020 e-Update

 

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Some Good News in Pandemic Times: Washington State’s Electronic Signature and Notary Laws Are Effective

Posted By USFN, Monday, August 17, 2020

by Wendy Lee, Esq.

McCalla Raymer Leibert Pierce, LLP

USFN Member (AL, CA, CT, FL, GA, IL, MS, NV, NJ, NY, OR, TX, WA)

One good thing to come out of 2020 is the Washington State Legislature’s adoption of the long-awaited Uniform Electronic Transactions Act (“UETA”). Passed in the form of SB 6028, this law was effective on June 11, 2020, and will allow electronic signatures to replace wet-ink signatures on contract documents. It further provides that any law requiring a record be in writing or a signature be applied will be satisfied if the record is electronic or if the signature is electronically applied to that document. The law further allows an electronic signature to be notarized as long as it complies with the electronic Notary law, which was passed last year in SB 5641, with a delayed effective date of October 1, 2020.  The second good thing to happen in 2020 was the Governor’s Proclamation accelerating the effective date of the electronic Notary law. The original proclamation was set to expire after April 2020, but it has since been extended twice and is now set to expire September 1, 2020.[1] With both major legal requirements ready and effective, it is now possible in Washington to electronically sign and execute virtually all documents in the foreclosure process at both a servicer and trustee level. 

E-Signatures and Foreclosure in Washington – the foundation has been laid
To have standing to foreclose in Washington under the non judicial foreclosure law (locally known as the Deed of Trust Act), the beneficiary must be the holder of the instrument or document evidencing the obligations secured by the deed of trust.[2] Furthermore, the trustee must have proof that the beneficiary is the holder of any promissory note in order to proceed to setting a sale. Acceptable proof may be in the form of a declaration by the beneficiary, made under the penalty of perjury stating that the beneficiary is the holder of any promissory note or other obligation.[3] This document is locally known as the “beneficiary declaration.” The Deed of Trust Act in Washington wasn’t specifically amended by the new electronic signature law, however Washington law, as of June 11, 2020 provides that “A record or signature may not be denied legal effect or enforceability solely because it is in electronic form” and “if a law requires a signature, an electronic signature satisfies the law.”[4]

Washington’s Uniform Electronic Transactions law is also specifically amending the state’s Uniform Commercial Code (UCC)[5] declaring that a person having “control of a transferable record is the holder, of the transferable record and has the same rights and defenses as a holder” and “a holder to which a negotiable document of title has been duly negotiated, or a purchaser, respectively” and that “[d]elivery, possession and endorsement are not required to obtain or exercise any of the rights under the subscription.”[6]

By combining Washington’s UETA (SB 6028) with the state UCC and the Deed of Trust Act, there is a legal basis to allow electronically signed beneficiary declarations, and, using the same foundation, the servicer required “Foreclosure Loss Mitigation Form,” commonly known as the loss mitigation affidavit, which is required to be sent with the Notice of Default,[7] is capable of being electronically signed. 

  • Best practice in this realm is to use a secure electronic database system with password protection, for the electronic signature and electronic record of that signature.This security must be documented and capable of being explained by a corporate witness if a signature is challenged in a contested foreclosure.

E-Notary law becomes effective seven months early due to COVID-19
Washington’s Electronic Notarial Acts law passed April 2019, effective originally on October 1, 2020, but now effective due to Governor Proclamation, is modeled after the Revised Uniform Law on Notarial Acts from 2017.  It will allow a Washington licensed notary, who is authorized to conduct electronic notarial acts, to notarize a document when the signor of the document is not physically present. The following elements are required to comply with this law:

  • Notary must have personal knowledge or satisfactory evidence of the identity of the remote individual
  • Notary must confirm the record before the individual is the same as the record before the notary
  • There must be an audio/visual recording of the notarial act
  • The notarial certificate must indicate that the notarial act was performed electronically

This revolutionary step in electronic notary law is further supported by the more recently enacted electronic signature law described in the prior section in specifically declaring that an electronic signature may be electronically notarized consistent with SB 5641, tying all these changes in law together. 


Conclusion
While our industry is facing an unprecedented downturn due to moratoria and state law impacts on the foreclosure process, these recent changes in Washington allow us to use the rare downtime in foreclosure processes to enable this new path forward, which will create efficiencies and reduce the spread of germs and more importantly, the COVID-19 virus.

If your company would like help in devising a system to allow electronic signatures or electronic notary processes, please don’t hesitate to contact me at : wendy.lee@mccalla.com. 

 



[2] RCW 61.24.005(2) Definitions. “Beneficiary”


[3] RCW 61.24.030(7)(a) Requisites to a Trustee Sale.


[4] SB 6028 (Section 7(1) and (4).


[5] RCW 62A.1-201(b)(21)


[6] SB 6028 Section 16. TRANSFERABLE RECORDS.


[7] RCW 61.24.031(2)

 

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August 2020 e-Update

 

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All Is Not Lost: NJ Supreme Court Opines on Enforcement of Note Lost by Predecessor

Posted By USFN, Monday, August 17, 2020
by Caitlin M. Donnelly, Esq. 
KML Law Group, P.C.
USFN Member (NJ, PA)

The New Jersey Supreme Court unanimously held in Investors Bank v. Javier Torres, (Docket Number A-55-18), that a lender that was both the transferee of a lost note affidavit and assignee of a mortgage, had the right to enforce both instruments.    

Facts of the Case
CitiMortgage, Inc., discovered the note was missing after the defendant, Javier Torres and his wife, defaulted under the terms of the note and mortgage. CitiMortgage had a digital copy of the note in its business records, which set forth its terms.  At some point thereafter, it executed a Lost Note Affidavit describing the search for the note, explaining its loss, and asserting that CitiMortgage remained “the lawful owner of the [n]ote.” CitiMortgage then assigned the mortgage and note to Investors Bank, who initiated the foreclosure action.  Throughout the litigation, defendants maintained that Investors Bank lacked standing because it could not enforce a lost note if it was not in possession when the note was lost.

The trial court determined that Investors had met all of the criteria for enforcement of a lost instrument under UCC§ 3-309. First, the digital copy of the note established its terms and second, that Investors Bank was able to enforce the note as it had been validly assigned the mortgage two months before filing the foreclosure action Finally, Investors Bank was required to  indemnify defendants against any liability in the event that a third party ever attempted to enforce the original note.   

On appeal, the Appellate Division affirmed, relying on a line of New Jersey cases that hold that a foreclosing mortgagee must either be in possession of the note or a valid assignment prior to commencing a foreclosure action.  The Appellate Division also relied on two statutes, N.J.S.A. 2A:25-1 and N.J.S.A. 46:9-9, favoring the free assignment of contractual rights absent any prohibition by operation of law or public policy.  In conjunction with the language of the Uniform Commercial Code, as adopted by the New Jersey Legislature, and invoking the principles of the equitable doctrine of unjust enrichment, it found that Investors Bank was entitled to foreclose.  

The Supreme Court of New Jersey granted defendants’ petition for certification. Amicus briefing and argument was also permitted by Legal Services of New Jersey, the Seton Hall Law School Center for Social Justice, and the New Jersey Business & Industry Association. 

Avoiding results that are "arbitrary, unworkable, and unfair" 
In its opinion, the Supreme Court agreed with the Appellate Division that New Jersey common law and statutory law under N.J.S.A. 2A:25-1 have long provided for the assignability of contractual rights with mortgage assignability specifically permitted under N.J.S.A. 46:9-9. The court then explained that N.J.S.A. 12A:3-301 allows a person to enforce an instrument they do not possess if they meet the standard set forth by section 3-309 of the New Jersey UCC, which closely tracks the original section 3-309 of the Uniform Commercial Code. 

N.J.S.A. 12A:3-301 and -309 are part of New Jersey’s adoption of the UCC. In 2002, after various jurisdictions interpreted their own UCC-based statutes to only allow enforcement by the holder of a note at the time it was lost or misplaced (while barring transferees from enforcing lost notes), the drafters of the UCC enacted an update to UCC §3-309 which specifically allows for a transferee to enforce a note lost by a predecessor-in-interest. UCC§ 3-309(a)(1)(B), cmt. 2 (2002).

In Torres, defendants argued that, because New Jersey’s legislature did not adopt the updated version of the UCC, it intended to prevent the enforceability of lost mortgage notes for transferees. The court rejected this argument, finding nothing in the plain language of N.J.S.A. 12A:3-309 suggesting an intention to undermine the assignability of mortgages under New Jersey common law, N.J.S.A. 2A:25-1 or N.J.S.A. 46:9-9. Further, the court determined that to find otherwise would “generate results that are arbitrary, unworkable, and unfair,” listing hypothetical examples such as barring the enforceability of mortgage notes that were misplaced by a single bank employee’s mistake or were lost in a fire or flood.

The court further addressed and affirmed the trial court’s decision to admit the Lost Note Affidavit under the business records exception to hearsay set forth in N.J.R.E. 803(c)(6). In so doing, the court first noted the Lost Note Affidavit was properly authenticated under N.J.R.E. 901 before rejecting defendants’ argument that Investors’ presentation of a CitiMortgage record made it inadmissible. The court then found the unknown passage of time between the discovery that the Note had been lost and the execution of the Affidavit was inconsequential as “the date of that discovery is unclear, and CitiMortgage’s representative certified that its business records are generally produced ‘at or near the time’ of the event ‘from information provided by persons with knowledge of the activity.”

Finally, the court declined to adopt Defendants’ position that the affidavit was inadmissible because it had been prepared in anticipation of litigation. After noting that the affidavit had been prepared well in advance of either the transfer of the note or the filing of the foreclosure action, the court ruled that, even if the affidavit had been prepared in anticipation of litigation, CitiMortgage had “no incentive to fabricate a claim that it lost the original note and has searched for it, to no avail.” Importantly, as the court noted, the parties did not dispute either the terms of the note or the accuracy of the digital copy of the note. Accordingly, the court agreed with the Appellate Division that the trial court’s consideration of the affidavit was not an abuse of discretion.

Based on its holding that N.J.S.A. 2A:25-1, N.J.S.A. 46:9-9, and New Jersey common law collectively allow for assignees of mortgages and transferees of lost mortgage notes to enforce the notes, the court examined the trial court’s granting Investors Bank’s motion for summary judgment. It found CitiMortgage had the right to enforce the lost note itself as well as the right to assign that right to Investors Bank. After finding the summary judgment record supported the valid assignment and enforceability of the lost note, the court noted that the trial court’s requirement that Investors Bank indemnify defendant Torres from future claims based on the lost Note satisfied N.J.S.A. 12A:3-309’s requirements of protection for the person required to pay the instrument from future claims based on that instrument.

Ultimately, the court affirmed the Appellate Division’s judgment as modified. In a footnote, the court declined to rely on the equitable principle of unjust enrichment in support of its decision, preferring to rely upon the statutory and common law support for same.

In rendering its ruling in Torres, the court has settled the enforceability of a lost mortgage note by an assignee of the party that lost the note, allowing assignees to enforce a lost note provided the entity that lost the note properly executes an affidavit setting forth the necessary facts. This clarity strengthens the rights of lenders and their assignees to enforce mortgage notes and helps borrowers and servicers avoid expensive and unnecessary litigation over what is now a nonissue.

Copyright © 2020 USFN. All rights reserved.

August 2020 e-Update

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Proving Your Case: The Role of a Corporate Witness

Posted By USFN, Friday, August 14, 2020



by Curtis Wilson, Esq.
McCalla Raymer Leibert Pierce, LLC 
USFN Member (AL, CA, CT, FL, GA, IL, MS, NV, NJ, NY, OR, TX, WA)

If you watch any legal drama or crime show on television, one trend you notice is that everyone is focused on finding the best witness to prove their case. Having the correct witness with the most knowledge of the event or situation is the key to any successful litigation. When it comes to litigation involving corporations, the same is true. However, the role of a corporate witness has additional requirements and requires a different knowledge base than a witness that testifies from their own knowledge of the facts.  

Preparation and Document Collection
A corporate witness’s role does not begin in the courtroom, but rather should begin well prior to trial. A corporate witness is often an employee of the corporation with specialized access to the records of the corporation, and with enhanced knowledge of their procedures. For this reason, it is recommended that the witness be assigned, and their preparation begin as early in the trial preparation period as possible. By having additional time to review the documents the witness can be more familiar with the facts required for testimony. Moreover, from a credibility standpoint, it is always preferred that the witness be involved with the provision of the evidence. At trial, it is very common for an opposing counsel to challenge a witness’s familiarity with the evidence and try to argue that the witness has never reviewed the evidence prior to trial. For a witness to be able to testify that they not only have intimate knowledge of the contents of the evidence, but additionally were the source of the evidence, reduces the opportunity for evidentiary challenges and increases the witness credibility. 

Authentication of Evidence
Once trial begins, the first and perhaps most important role of a corporate witness is to authenticate documentary evidence so it may be admitted into the evidentiary record. Typically, any record or piece of information cannot be admitted into evidence at trial unless it is submitted by the person who personally created it and is considered hearsay. Hearsay is defined as information or evidence received from another person which cannot be substantiated. In short, until the documents are submitted by the correct person, they are considered to be of no evidentiary value as the integrity of the information is in question. With the complexity and size of many corporations, it would be impossible to bring in the actual employee or person who created each individual record or piece of information to be relied upon. It is for this reason that there is an exception to the hearsay rule, the business records exception. 

The business records exception allows a single corporate representative to authenticate any records of the corporation for submission into evidence, if the witness and the records meet certain criteria. The witness must be able to testify they have personal knowledge of the policies and procedures of the corporation utilized in making the records. The records themselves must be made in the regular course of business, and it must be regular business of the corporation to make these records. Further, the witness must be able to state the records were made by someone with personal knowledge of making the records and the records were made at or near the time of the occurrence. If the court makes a finding the witness has sufficient personal knowledge of the business practices of the corporation, then the witness can testify the records meet the above described criteria, and they will be accepted into the record as authenticated.

A qualified witness requires extensive and varied training to demonstrate sufficient personal knowledge of the business operations of a corporation. The witness should be able to testify about the names of the departments which keep the records and any record keeping technology or systems used, which improves the credibility of the witness with the court, making it easier to get evidence into the record over objection. Getting the evidence into the record is often harder than getting the factual testimony established once the evidence has been authenticated and received by the court. Despite the plethora of case law which attempts to describe or define sufficient personal knowledge as a corporate witness, courts and judges vary in what they expect, and having as much training as possible is absolutely necessary in case you face a difficult judiciary. 

Fact Testimony 
Once the evidence has been accepted by the court and is part of the evidentiary record, the witness’s job becomes one of establishing the factual record. Often in corporate and default litigation, the facts are integrated into business records which are technical or require specific knowledge to interpret. For example, evidence like payment histories, correspondence records, and other internal records often include proprietary codes or abbreviations which require specific knowledge and testimony. A witness may be required to testify about anything from dates of events, payments discrepancies, mailing of notices, as well as many other subjects. Again, the training of the witness is of the utmost importance as the court gives weight to the evidence based up on the credibility of the witness and the quality of their testimony. 

A corporate witness not only has to be subject to a direct examination to get their parties’ facts into the record, but also subject to cross examination. Cross examination is likely the most difficult part of the witness’s role in establishing a record. Generally, most cross examination is targeted at confusing the witness or getting the witness to make a mistake in their testimony which injures their credibility or the case in general. Often, the opposing counsel will ask the same question several different ways to try and create inconsistency in an answer or will twist the witness’s previous testimony to their needs. Again, a witness should have extensive training to understand how to avoid these traps, as the assistance their counsel can provide during cross-examination is limited. 

Recent Updates Affecting Corporate Witnesses
The role of the corporate witness has changed somewhat in recent months. With the COVID-19 pandemic affecting every aspect of life for most people around the world, it has also greatly affected how corporate witnesses can perform their job. One of the most common changes to a corporate witness’s job is that their appearances have been primarily remote by use of video technology. Prior to the current pandemic, a witness was required to be in-person at trial except for very rare extenuating circumstances. Appearance through video technology has changed the face of trial and created new challenges for the court, witnesses, and their counsel. One of the most difficult aspects of witness testimony while working remotely stems from inabilities to organize evidence. When appearing in person for trial, it is very easy for the counsel to hand the witness the required evidence in the correct order, as needed. Working remotely presents a challenge that each party must have pre-organized evidence books to attempt to alleviate difficulties when presenting evidence. Given that some trials rely on numerous exhibits for corporate witnesses, even into the hundreds of documents, providing an organizational scheme that keeps the judge, counsel and witnesses on the same page has been a challenge. Further, the swearing in of the witness to testify requires changes to procedure. A witness must be sworn in by the judge as a prerequisite of their testimony. However, working remotely, the courts have been requiring a notary to be present with the witness to swear them in, as a video swearing in has been considered insufficient. The logistics of having a notary present while a witness is both working from home and attempting to socially distance has provided some issues. It is hoped that as we slowly work through this new normal affecting the world, better and more consistent procedures will be identified for remote trial appearances. 

In addition to the COVID pandemic, there are continuous changes to the case law as it defines the role and responsibilities of a corporate witness. For example, recently in Florida, the Supreme Court issued a groundbreaking case , which greatly reduces the burden of responsibility and testimony of a corporate witness to qualify to testify. Previously, a corporate witness would have to testify they had personal knowledge of the policies and procedures of the corporation, and further was subject to strict testimonial scrutiny wherein they would have to prove that qualification with background facts, information and further descriptions of their training and role in the corporation. The Florida Supreme Court has shifted that burden, to the benefit of the witness. The new standard per the Florida Supreme Court states that if the witness testifies, they have personal knowledge to qualify as a valid corporate witness, they do not have any responsibility to provide backing evidence of their qualifications. Rather, it is the burden of the opposing party to prove they lack proper qualifications. Further, this case strengthens the presumption that corporate documents are authentic and authorized. This shift, per the Supreme Court’s findings, is intended to force parties to argue the substantive facts of the case, rather than get bogged down in the procedural arguments regarding qualifications of witnesses and authenticity of evidence. This case will greatly reduce the amount of work to qualify the corporate representative as an appropriate witness, and to have the evidence authenticated, which should shorten trials and lead to outcomes based on the merits of the case, not the bureaucracy of procedure.  


1 Jackson v. Household Finance Corp. III, Fl. SC18-357 (Fla. 2020)

 

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Spring 2020 USFN Report


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Staring Down Adversity and Uncertainty During the COVID-19 Pandemic

Posted By USFN, Friday, August 14, 2020

 

by Jeremy B. Wilkins, Esq.
Brock & Scott, PLLC 
USFN Member (AL, CT, FL, GA, MA, MD, ME, MI, NC, NH, OH, RI, SC, TN, VA, VT)

and James Harshaw, Jr., Guest Author 

As the COVID-19 pandemic sweeps through the United States and the rest of the world, there are far-ranging impacts at levels both from a health point of view and a socio-economic point of view. Specifically, the impacts on the mortgage default servicing industry, to this point, have been deep. The industry has come to a screeching halt almost overnight from jurisdiction to jurisdiction while also remaining under a cloud of uncertainty for what the future may hold. 

In no time, companies within the industry had business continuity plans tested beyond natural disaster response planning to a global pandemic. Immediately, as revenue streams were abruptly halted, the industry was faced with vendors taking axiomatic remedial measures to bolster viability. Businesses in general were forced to take steps such as seeking Paycheck Protection Program Loans (PPP Loans) from the Small Business Administration, applying for private loans, and instituting salary reductions, furloughs, and layoffs.

Meanwhile, procedural changes were occurring daily across many jurisdictions as state and local governments issued varying forms of “shelter in place” or “stay at home” orders to mitigate the spread of the COVID-19 virus. Consequently, companies’ access to their offices were either limited or cut off altogether. State court systems were also impacted in some fashion with either limited or no access. Seemingly, the one constant premise that has defined the socio-economic impact of the COVID-19 pandemic was situational fluidity intensifying the atmosphere of adversity. 

Jim Harshaw, Jr. knows something about navigating the uncharted waters of adversity. As a University of Virginia wrestler, Harshaw was an NCAA All-American and three-time ACC Wrestling Champion, which helped him develop the mindset needed to transition into his professional career as a speaker, podcast host, and professional performance coach. On his podcast, “Success Through Failure,” he interviews world-class performers like Navy SEALs, Olympic gold medalists, and CEOs, and shares their tactics and strategies with clients and audiences via coaching and speaking. 

All of this has helped Harshaw create an approach to adversity that is reasoned with an immediate calming effect, which can help when adversity is often treated as the "elephant in the room," creating a response of irrational urgency. 

“We tend to react immediately and feel pressed to do so,” says Harshaw. “The most efficient way to react thoughtfully and effectively is to use something I call the ‘Productive Pause.’ I define it as a short period where you pose questions such as 1) What is really important here? 2) What advice would I give someone else in this situation?”

Harshaw feels that it is important not to overreact when confronting adversity from its manifestation. Using his Productive Pause approach, leaders can focus on two characteristics to instill confidence, which can be paramount to leadership. 

“Communication and encouragement [are hallmarks of a leader exuding confidence],” Harshaw stresses. “Leaders undervalue the importance of words of encouragement or even a simple inquiry like, ’How are you doing?’” 

Harshaw’s approach is a simplification rooted in actions that we take for granted at times, almost eviscerating the overall concept of adversity by embracing it and stressing the benefits gleaned by enduring through adversity. “Adversity certainly scares us whether we like it or not. It is not something we seek. However, when we look back on adversity in our lives, we can always see some kind of benefit whether that is something learned or strength gained,” he says. “It is said that necessity is the mother of invention. Adversity creates the need to adapt and improve upon the status quo.”                  

Leaders sometimes face picking up the pieces after incurring dramatic, often disruptive changes in the work environment such as furloughs, layoffs, reduction in hours, and reduction in compensation. Mitigation measures will impact employees personally and can lead to a fracture of long-standing employee relationships, consequently the environment created can be devastating to morale which can cripple an organization if not handled properly. Harshaw’s advice goes back to the fundamental tenets of communication being the first steps to building up broken spirits of employees.

“Everybody wants to be heard and understood. Whether it’s my 6-year-old, who is crying because her big brother was mean to her or an employee who is feeling anxious or frustrated due to dramatic changes that have occurred at work,” he says. “In order to help your remaining staff move forward, allowing people to communicate how they feel is an effective way to help people process the current situation. This can be in a one-on-one setting, small groups, or a larger group. Ignoring it and hoping people will just move on will result in distrust, gossip, and long-term problems.” 

Harshaw further suggests considering outside of the box activities and opportunity for leadership to engage staff during times of adversity. 

“People are used to ‘water cooler talk’, a clear delineation between work and home, and other elements of work that we take for granted. Finding ways to replicate these in some small way – even if it is the now common, virtual happy hour – is critical. Employers can also provide access to a group yoga instructor or other creative means to connecting through social and health activities.” 

Harshaw says that to ensure proper communication within an organization, reinforcing the message is key.

“A good format for communicating is to tell them what you’re going to tell them, tell them, then tell them what you told them,” he says, drawing on his public speaking experience “While it sounds like a cute gimmick, it is an incredibly effective tactic and employed by some of the top communicators in the world. In fact, Steve Jobs regularly used this in his communications.”  

As the world fostered isolation as response to the COVID-19 pandemic, Harshaw warns on avoiding certain behaviors that could affect communication with staff, colleagues, and industry partners.

“Lines of communication are naturally closed off when we’re not crossing paths in the hallways, exchanging information over water cooler talk, or not visiting clients onsite,” he explains. “Not recognizing the need for human connection and open communication is a surefire way to create indifference and apathy.” As a result, organizations need to find ways to create the personal connection either through emails, text messages, video meetings, etc. This is no substitute for personal interaction but there are ways to bridge the gap in the short term with technology and other resources. 

Harshaw draws from his experience in performance coaching, public speaking, and hosting a podcast to provide the example of resilience during times of adversity by pointing to the story of Erik Weihenmayer. “Erik is a mountaineer. He has summited Mount Everest. He has also whitewater kayaked some of the biggest whitewater rapids in the world in the Grand Canyon. He is also blind. He lost his sight at the age of 13. Erik shows me and everyone else that we as humans have a tremendous capacity for resilience,” explained Harshaw.

As people try to move forward in the face of adversity and find commonality in the goal of achieving sustainable success, Harshaw suggested adhering to core goals.

“Service,” Harshaw responded, without hesitation. “Those organizations who focus on truly serving their employees, customers, clients will be the most resilient. They will build relationships and trust and, as a result, find themselves in a stronger position than even before.”

Even Harshaw's podcast title, "Success through Failure," serves as a type of mantra that can give the audience inspiration.

“We’re all going to fail,” he said. “If my podcast has taught me one thing, it’s that the highest performers in the world — Navy SEALs, Olympic gold medalists, CEOs, New York Times bestselling authors — they all have stories of failure. You, the reader, will also fail. That’s not a reason for you to believe that you’re not good enough, not smart enough, or not capable enough. It’s simply a sign that you’re trying. That you’re moving forward. That you’re on the right path.”

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Spring 2020 USFN Report

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Never Wait Until After the Statute of Limitation to Foreclose in New Mexico…But if You Do, You May Get Partial Credit

Posted By USFN, Thursday, August 13, 2020

by Jason C. Bousliman, Esq.
McCarthy Holthus, LLP
USFN Member (AZ, CA, CO, ID, NV, NM, OR, TX, WA)

This morning, I sat through the most grueling hearing of my professional life; my client’s future hung in the balance. Losing meant loss of freedom - no car, no social life, nothing. The decision-maker hit me with questions and arguments that stung like roundhouse kicks. Was this a Supreme Court oral argument? Nope. A high stakes parole hearing? Nope. Not even close. Worse, I was at my 15-year-old son’s parent/teacher conference. Seriously. Let me guess: you want to know what this has to do with the statute of limitations for a foreclosure in New Mexico. Have patience; I’ll get there. To start, here’s a run-down of The Great Parent/Teacher Conference Inquisition of 2020:

 

“Your son NEVER turns his homework in on time!” one teacher exclaimed. 


“Well, I didn’t know that, and I trusted him to follow the classroom rules,” I said. 


“He can always turn in homework late for partial credit,” an administrator proclaimed. 


“I swear I turned it all in…” my son kept quietly uttering.


”Don’t you want your child to succeed?!” my last inquisitor jabbed.


“No,” I said sarcastically, “I was hoping my son could end up on that Dr. Phil show talking about how my lack of holding him accountable led him down a bad path….”

 

Okay, I admit I didn’t actually say that last part (despite the fact that I was vehemently thinking it at all of them), but the discussion reminded me about the statute of limitation in New Mexico. You know, New Mexico, the place where your foreclosure timelines go to die and where lenders have long asked, “When does the statute of limitation expire?” In other words, “When is the last day for my son to submit his homework for even partial credit?” We now have an answer from the New Mexico Court of Appeals in the case of LSF9 Master Participation Trust v. Moreno, No. A-1-CA-36879 (Ct. App. December 18, 2019) citing LSF9 Master Participation Trust v. Sanchez, 2019-NMCA-055, 450 P.2d 413. 

In Moreno, the initial default occurred on November 1, 2009, and the complaint was filed on December 11, 2015. The District Court held that the six-year statute of limitation expired on November 1, 2015. The complaint was deemed to be filed one month and eleven days too late and was dismissed accordingly. The Court of Appeals disagreed, finding that the statute of limitation runs from the date of each individual missed payment. Therefore, although the bank was not allowed to recover payments due more than six years from the filing date, the bank was entitled to get “partial credit” and recover payments due within the six-year window. 

Profound questions remain on this issue including those concerning de-acceleration, re-acceleration and prior dismissals (with or without prejudice). Consequently, the best practice in any case is to file within six years of the initial default date. It’s the age-old wisdom to do something the first day you can, not the last day you must. However, if faced with this issue in New Mexico, you now have permission to turn in your homework late for partial credit. 

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Spring 2020 USFN Report


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Navigating the Affordable Dwelling Unit in Virginia Foreclosure

Posted By USFN, Thursday, August 13, 2020

by Karen Perry, Esq.

Rosenberg & Associates, LLC
USFN Member (DC, MD, VA)

 

By state statutes and local ordinances, Virginia established opportunities for affordable housing to serve its low- to moderate-income residents. The goal to provide affordable housing to all Commonwealth residents is achieved by allowing for certain increases in density to reduce land prices for that housing. Virginia Code § 15.2-2304, -2305 and -2305.1 set forth the authority for certain local governments to create programs for affordable dwelling units (“ADUs”) by their governing body’s zoning ordinances. Each locality’s ADU program can vary to a certain extent within the statutory framework.

For purposes of foreclosure, the title review team should be able to identify ADU designated property when they review the title abstract. This is important as ADU programs are afforded certain rights and require the locality to receive certain notices. ADU ordinances normally require notice of default, notice of foreclosure sale, right to cure default, and right of first refusal during certain control periods. Additionally, ADU ordinances can sometimes demand payment of a percentage of the sale price to the extent that it is higher than the control price set by the locality. However, if the foreclosure requirements are properly followed, then the ADU ordinance is generally lifted from the property following foreclosure.

When an ADU property is identified prior to foreclosure in Virginia, it is vital to read the local government’s ADU zoning ordinance requirements where the property is located. Each locality’s ADU program must be reviewed to meet its specific requirements. Those requirements should be stated in the recorded ADU Declaration, although some programs have multiple declaration, so it is important to have the one that controls the specific property being foreclosed. The Declaration will include information about the control period, the specific properties encumbered by the ADU ordinance, and specific requirements for foreclosure.

If the control period is still in effect, then foreclosure can only happen under the requirements in the applicable ADU ordinance. Most ADU requirements will first require a written notice of default, similar to a demand letter. The letter usually must include a reinstatement amount and a payoff amount as well as a specific time period in which the ADU program can cure the default or exercise its right to purchase the property. Following the written notice of default and right to cure, the locality may respond that it asserts or will assert a claim against proceeds from any foreclosure sale, or that it wishes to purchase the property.

As an example, an ADU declaration may state that the county is entitled to one half of the difference between the ADU original control price paid by the owner, adjusted to the date of sale, and the actual purchase price paid for the property. After receiving the notice of default, the county may respond to the trustee that it intends to claim its portion of the proceeds and will provide the control price. The trustee will then sell the property and any proceeds over the control price will be split between the county and the noteholder. This can have serious implications on bid amounts, so it is important to work with your trustee firm to understand how the county is handling the property. If the property is not sold to the county, then generally the ADU covenants will no longer apply and the property can be sold at REO to any purchaser. Not following ADU covenants can result in a void or voidable foreclosure sale, so it is important to be aware of the requirements and work with your trustee firm to meet them.

 

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4th Circuit Clarifies "Branch Office" for HUD Meetings

Posted By USFN, Thursday, August 13, 2020
by Alyssa Szymczyk, Esq.
Orlans PC
USFN Member (DC, DE, MA, MD, MI, NH, RI, VA) 

On April 20, 2020, in a case of first impression, the United States Court of Appeals for the Fourth Circuit in Jacqueline Dawn Stepp v. U.S. Bank National Association and ALG Trustee, LLC, (No. 19-1067) added to the significant body of case law surrounding claimed exceptions by servicers to the HUD pre-foreclosure face to face meeting requirement. Under HUD regulation, 24 C.F.R.§203.604 (b) and (c), the mortgagee of a FHA mortgage must make reasonable efforts to conduct a face to face interview with the borrower within 90 days of default if the mortgagee, its servicer or a “branch office” of either, is located within 200 miles of the mortgaged property. Click here for the case. 

Stepp, whose mortgaged property was within 200 miles of a bank office of U.S. Bank National Association (the “Bank”) in Richmond, VA, filed a complaint in Federal Court against the Bank and ALG Trustee, LLC (“ALG”) seeking damages and rescission of the foreclosure arguing that the Bank initiated foreclosure without first offering her a face-to-face meeting. The Bank and ALG moved to dismiss the complaint arguing that the Bank was exempt from the face-to-face requirement and the U.S. District Court for the Western District of Virginia agreed, holding a bank office that conducts no mortgage-related business is not a mortgagee’s “branch office” under federal law and dismissed the complaint. Stepp filed a timely appeal.  On appeal, Alyssa Szymczyk and Jason Murphy of Orlans PC represented ALG.   

The 4th Circuit affirmed the decision of the District Court, holding that while the bank office at issue was within 200 miles of the mortgaged property, it was not a “branch office” pursuant to 24 C.F.R. §203.604(c)(2) as it was devoted exclusively to the management of constructive trusts and no mortgage-related business was conducted there. Both courts adopted the Bank and ALG’s argument that the court must look to the specific type of activities that are conducted at the location, rejecting Stepp’s assertion that the term “branch office” should be broadly construed, essentially deeming any bank office a “branch office.”

The court reasoned that words in a statute are to be read in context, not isolation, and in order to properly ascertain the application of the regulation and its exception, there should be at minimum, “an office at which some business related to mortgages is done.” Thus, a bank office carrying on no mortgage-related business, “even if within 200 miles of a mortgagor’s home, will be poorly positioned to discuss the mortgage-specific loss mitigation options outlined by the statute, ‘such as special forbearance, loan modification, pre-foreclosure sale…’.” The Court also noted its characterization of a “branch office” as one requiring conducting of mortgage-related business (accepting checks, paying checks and lending money) is in accord with the definition of “branch offices” in other banking statutes and that the lower court’s common sense definition was consistent with the regulatory text and its purpose.

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Paid Debt Relief Companies Could Be Shown the Exit in North Carolina

Posted By USFN, Thursday, August 13, 2020
by Jeffrey A. Bunda, Esq.
Hutchens Law Firm, LLP
USFN Member (NC, SC)

As the devastating effects of the COVID-19 lockdown continue to linger throughout the American economy, it’s reasonable to expect a surge in foreclosures not seen since the Great Recession. As of press time for this article, HUD, FHA, and GSE-backed single-family foreclosures remain on hold. Once these moratoria are lifted, however, servicers will resume foreclosure activity and will begin fielding correspondent requests for loss mitigation from homeowners reeling from the effects of 2020.

Homeowners attending foreclosure hearings are often there to implore the court to grant them more time for loss mitigation or other foreclosure prevention. During the depths of the Great Recession, rarely a court session would pass when a homeowner would not confidently report to the clerk that their loan was in the process of being modified and proudly show off a receipt on letterhead from an out-of-state company showing they’d paid this “firm” a fee up front – usually in the thousands of dollars – to “modify” their loan. Upon further inquiry from the clerk, the homeowner would reveal that they ignored their servicer’s initial loss mitigation solicitations and had not made contact upon default. Instead, they placed their hopes in the false prophets of late-night advertisers promising to stop their foreclosure.

Chagrined, the court would do its best to reassure the homeowner that he needed to make direct contact with the servicer and that up-front debt adjustment companies were “illegal” in North Carolina and, should the homeowner feel that he has been wronged, to contact the Attorney General’s office and report the offending company. Charging a fee for these services in North Carolina is a Class 2 Misdemeanor unless you are a North Carolina-licensed attorney or a licensed credit counseling agency. This threat of a slap on the wrist doesn’t carry much gravitas and, although North Carolina consumers seem to have reduced their use of these companies, court sessions still occur where homeowners report that they paid an out-of-state debt adjuster to save their home.

This summer, House Bill 1067 began percolating through the North Carolina General Assembly. This bill would strengthen a consumer’s position if aggrieved by an out-of-state debt adjustment company selling only false promises. This bill would make any contracts between consumers and debt-adjustment companies void as a matter of public policy and would make such activities an unfair and deceptive trade practice (the magic “treble” damages and attorney’s fees that gives teeth to many consumer protection statutes). This bill appeared to expressly target the “bad actors” in the industry, such as the fly-by-night companies that advertise on television alongside psychic hotlines and miracle supplements. More reputable debt-relief companies (such as companies assisting with IRS negotiations or consumer credit card debt), however, expressed concerns that the one-size-fits-all approach would deprive North Carolina consumers of these services. After initially moving forward with bipartisan support, the bill has been returned to the Judiciary Committee for further negotiations. 

Where does this leave servicers? Well, if/when the bill eventually passes to serve its apparent intended purpose (e.g., to prevent these companies from hoodwinking homeowners), servicers should recognize the imposition of civil liability on these companies when receiving inquiries from them acting as authorized third parties. Even before this bill, your author defended servicers from civil lawsuits by consumer attorneys lumping the servicer in with the debt-adjuster in claims for damages of wrongful foreclosure. If servicers receive an authorization from such a non-attorney company, servicers would be well-counseled to develop procedures to make contact with the homeowner to directly appraise him of the status of loss mitigation so that the homeowner is not surprised if loss mitigation ultimately fails.

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Challenging Validity of Mechanic’s Liens in Kansas

Posted By USFN, Thursday, August 13, 2020

by Blair Gisi, Esq. 
SouthLaw, P.C. 
USFN Member (IA, KS, MO, NE)

The Kansas Court of Appeals in In re A Purported Lien Against Prop. of Dist. at City Ctr., LLC, 2020 Kan. App. LEXIS 13 (Ct. App. Feb. 28, 2020) reversed the district court in an interesting case regarding an allegedly fraudulent mechanic’s lien.

This case began with a recognizable fact pattern where a construction company was contracted to build a mixed-use development.  The contractor then hired a subcontractor to supply steel and labor.  As is often the case, change orders began to be submitted and approved resulting in a total that exceeded the original contract terms.

Subsequently, the subcontractor filed a mechanic’s lien for unpaid labor and cost materials totaling over $400,000 – which was the difference between the value of the work the subcontractor believed it had completed and the amount already paid.  However, as part of the supporting documentation filed with the mechanic’s lien, the subcontractor failed to include itemizations evidencing the full value of the purported additional labor, leaving a gap of approximately $25,000.

Where this case takes an interesting turn is that instead of the contractor challenging the mechanic’s in the traditional way under K.S.A. §60-1108 or the subcontractor amending or foreclosing the mechanic’s lien pursuant to K.S.A. §§60-1105(a) or 60-1106, the contractor filed a motion claiming the lien was fraudulent under K.S.A. 2019 Supp. §58-4301.

K.S.A. §58-4301 was enacted to address issues with militias and “common-law type groups” who file and record fraudulent liens against properties in an effort to harass property owners and delay judicial proceedings.  The key issue to analyze under this statute with regards to whether a document is “fraudulent” is whether the document or instrument is provided for by the constitution or laws of Kansas or the United States.  Legitimacy of the actual document is not weighed or analyzed. 

The benefit to the contractor here (and presumably why this route was chosen) is that the statute provides for an expedited review and does not require a filing fee.  If there is substantial compliance with the statute, then, “the court’s findings may be made solely on a review of the documentation or instrument attached to the motion and without hearing any testimonial evidence.”  K.S.A. §58-4301(b).  The Motion can also be heard ex parte without delay or notice of any kind.

Relying on its authority to expeditiously review the matter, the district court granted the contractor’s motion removing the lien before the subcontractor could even object or otherwise respond; basing its decision on the subcontractor’s failure to account for the $25,000 in additional work and finding the mechanic’s lien insufficient to provide notice for what claims were actually owed.

The problem for the contractor (and the district court), however, was that the mechanic’s lien at issue was and is a document provided for by Kansas law, therefore, the decision to remove the lien as “fraudulent” was an error and the case was remanded.  The district court should not have even looked at whether the lien itself was sufficient or statutorily compliant.

In applying this case to the servicing industry, the important take away here is that even where a mechanic’s lien appears to be faulty or even fraudulent, the shortcut for the lien removal provided under K.S.A. §58-4301 has to be avoided.  The Court will not look at the validity of a mechanic’s lien under that statute since we now know that the mechanic’s lien is provided for under Kansas law.

 

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July 2020 Member Moves + News

Posted By USFN, Monday, August 3, 2020


Scott & Corley, PA (USFN Member - SC), is pleased to announce that Reginald “Reggie” P. Corley has been selected as one of twenty-eight Midlands-area business leaders — 14 “established community stalwarts” and 14 “hard-charging game-changers” — have been selected as members of the Columbia Regional Business Report’s second class of Icons and Phenoms.

The Columbia Regional Business Report is honoring a pair of groups making an impact on the area business scene: Icons - “the respected pillars who have established standards of business and civic excellence”; and Phenoms - “the motivated go-getters who are getting things done in new and exciting ways.” This year’s honorees span a wide range of industry, from construction pioneers to city leaders to nonprofit champions.

Award recipients, nominated by Columbia Regional Business Report readers and selected by a panel of judges, will be recognized at a virtual/online event on August 5, 2020. 

Reggie is rated AV Preeminent from Martindale-Hubbell and is a repeat selection to Best Lawyers in America in the field of Mortgage Banking Foreclosure Law, and Super Lawyers in the field of Creditor Debtor Rights. He is a 2018 recipient of the South Carolina Lawyers Weekly Leadership in Law award and is a Riley Diversity Leadership Fellow within the diversity leadership program at Furman University.  Reggie is a current member of the Furman University Alumni Board of Directors, as well as being a current board member of the Palmetto Land Title Association (PLTA).

 

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Washington State Governor Inslee Extends Eviction Moratorium Through October 15, 2020

Posted By USFN, Monday, July 27, 2020

by Wendy Lee, Esq.
McCalla Raymer Leibert Pierce, LLC
USFN Member (AL, CA, CT, FL, GA, IL, MS, NV, NJ, NY, OR, TX, WA)

On July 24, Washington State Governor Jay Inslee formally extended the COVID-19 housing proclamations made earlier in the year, and updated guidance related to some of the reopening plans made within the state.  The announcement most relevant to the default servicing and REO industry is contained within proclamation 20-19.3, which extended proclamations 20-05 (state of emergency) and extended the statewide moratorium on evictions, contained within 20-19.2, through October 15, 2020. 


This proclamation and extension specifically prohibit:

  • Servicing, enforcing, or threatening to serve or enforce any notice requiring a resident to vacate.The only exceptions being:
    • if the property owner attaches an affidavit attesting that the action is necessary to respond to a significant and immediate risk to health, safety, or property of others;
    • if tenant is provided 60 days written notice that owner intends to occupy as personal residence or sell the property;
    • THERE IS NO EXCEPTION FOR NON-FEDERALLY BACKED MORTGAGES.
  • Charging late fees for non-payment of rent if the non-payment or late payment occurred on or after February 29, 2020 (the date of the  state of emergency).

  • Treating unpaid rent as enforceable debt when non-payment is a result of the COVID-19 outbreak and occurred after February 29, 2020.The only exception is:
    • If the owner demonstrates by a preponderance of the evidence that the resident was offered, and refused or failed to comply with, a re-payment plan that was reasonable based on the individual financial, health and other circumstances of that resident.
  • Increasing the rate of rent for any dwelling or parcel of land occupied as a dwelling and also for commercial rental property if the tenant was materially impacted by COVID-19.For individuals this applies if the individual was personally impacted and unable to work.For businesses if they were deemed non-essential or lost staff or customers due to COVID-19.

 

Mortgage servicers and investors should consider this action checklist to ensure compliance with the Washington state proclamation:


Review any pre and post sale foreclosure notices and discontinue sending any that might be interpreted as threatening to serve, seek, or enforce any eviction order or right that might accrue as a result of a foreclosure.  This applies to all non-federally backed mortgage foreclosures.


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Maine Legislature Passes Bill Affecting Residential Foreclosure, Property Preservations

Posted By USFN, Thursday, July 23, 2020
by James Garnet
Brock and Scott, PLLC
USFN Member (AL, CT, FL, GA, MA, MD, ME, ME, MI, NC, NH, OH, RI, SC, TN, VA, VT)

The Maine Legislature recently passed a bill that will have an impact on the residential foreclosure and property preservation processes (An Act to Preserve the Value of Abandoned Properties by Allowing Entry by Mortgagees – H.P. 1407 – L.D. 1963). This bill was signed by the Governor on March 18, 2020 and will take effect on June 16, 2020.

The stated purpose of this bill is to assist communities and financial institutions when a property becomes abandoned by the owner. In reality, the bill makes it more difficult for financial institutions to secure a property or take any ameliorative actions to prevent further deterioration.

Most mortgages contain a provision that allows a mortgagee to enter a property to make repairs, change locks, replace or board up doors and windows, drain water from the pipes or rectify any code violations or dangerous conditions. This new law, however, will place additional burdens upon mortgagees and mortgage loan servicers who have commenced a foreclosure action before they can take any of the aforementioned actions.

After commencement of an action for foreclosure, a mortgage loan servicer is required to file an affidavit with the court attesting to the abandonment of the property before any property preservation efforts that require entry on to the property may be commenced.

The bill sets forth the criteria that may be used to make a determination of abandonment and further sets forth what must be included in the affidavit and who may attest to those facts. The court will not make a determination of abandonment or take any further action on the filed affidavit.

The bill further imposes notice and record maintenance requirements upon the mortgage loan servicer. The notice must be posted on the front door of the property and the bill specifies what information is required to be included in the notice. Records of entry must be maintained by the servicer or its designee for at least four years. The bill also provides for penalties against servicers for any violations.

Text of the full bill may be found here: https://www.usfn.org/resource/resmgr/misc_images/BrockScott_MEHP1407_4_15_20.pdf

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The Impact of COVID-19 on Evictions in the Pacific Northwest

Posted By USFN, Thursday, July 23, 2020
by Cara J. Richter, Esq.
The Wolf Firm, A Law Corporation
USFN Member (CA, ID, OR, WA)

As early as February, the Pacific Northwest region of the country, including the states of Washington, Oregon, and Idaho, established measures to respond to the growing Coronavirus (COVID-19) pandemic.  Each state implemented its own equivalent of a stay-home/stay-healthy order, with a special carve-out for those business operations providing essential services to the public.   While none of the states has independently banned foreclosures of residential trust deeds, they have each taken steps, in some cases significant ones, to curtail involuntary displacement of people during the COVID-19 pandemic.  

In Washington, Governor Jay Inslee signed a proclamation whereby he instituted a broad statewide prohibition against evicting occupants of residential dwellings and commercial rental properties.  The prohibition, which is effective until June 4, 2020, applies to landlords, property owners, property managers and law enforcement alike.  It strictly forbids any action, whether actual or by threat, to recover possession of property unless it can be established that there is a significant and immediate risk to the health or safety of others.  The prohibited actions include, but are not limited to, issuing a notice to vacate, seeking or enforcing agreements to vacate, as well as filing an unlawful detainer action.  Indeed, a plain reading of the proclamation would seem to suggest that even negotiating a cash-for-keys agreement could be interpreted as a prohibited activity in Washington.  

Kate Brown, the governor of Oregon, took similar steps to curtail involuntary displacement of Oregonians by declaring a state of emergency and signing an executive order imposing a temporary moratorium on both residential and commercial evictions.  Oregon’s eviction moratorium remains in effect until June 30, 2020 unless otherwise extended or terminated by the governor.   Interestingly, the executive order explicitly states that it does not apply to the termination of residential rental agreements for causes other than nonpayment of rent.  This means that a post-foreclosure REO eviction of a former owner-occupant is theoretically permissible in Oregon, as opposed to Washington, since in the post-foreclosure scenario there would no rental agreement to terminate, nor the cause for nonpayment of rent.  

Idaho’s governor, Brad Little, has yet to issue a statewide moratorium on evictions.  On May 4, Idaho’s Supreme Court stepped in and signed an order approving and adopting the Statement of Landlord Regarding Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Eviction Moratorium (Statement of Landlord). The Statement of Landlord requires the landlord, property manager and/or property owner to declare, under penalty of perjury, that they have complied with the CARES Act eviction moratorium.  Under the terms of the Order, which was amended on May 5, 2020, for any eviction action initiated between May 4, 2020 and July 25, 2020, the Statement of Landlord must be filed in conjunction with the underlying complaint.  The Idaho Supreme Court also authorized statewide use and distribution, through individual court websites, of an Answer to Complaint – CARES Act form.  This specific form, designed for Idaho residents who have been negatively affected by COVID-19, can be filed by an occupant in response to an eviction complaint.   

Depending on how the COVID-19 pandemic evolves in the months to come, the states within the Pacific Northwest may establish additional measures to address the crisis.  It is therefore critical, from a compliance and best practice perspective, to consult with local counsel prior to initiating any eviction action.  

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June 2020 Member Moves + News

Posted By USFN, Monday, July 6, 2020

 

McCalla Raymer Leibert Pierce, LLC (USFN Member - AL, CA, CT, FL, GA, IL, MS, NV, NJ, NY, OR, TX, WA) (“MRLP”), one of the largest and most respected default firms in the country, is continuing to expand its industry footprint, launching new offices in Washington, Oregon and Texas.

Ms. Wendy Lee, the newest addition to the management team will assume the role of Managing Partner of Oregon and Washington Foreclosure and Litigation Practice.  Ms. Lee brings over 17 years of experience and default servicing knowledge to the MRLP family.  Marty Stone, the Managing Partner and CEO of MRLP said, “We are honored to have Wendy join our team.  As we have carefully decided to grow our firm for the future, we have been open to strategic talent and partnerships with industry leaders.  Wendy has been a friend of the firm for many years and we have always experienced a close relationship and common mindset in responding to the industry’s changes.  We feel that Wendy is a perfect match for the MRLP family.”

Ms. Lee commented, “Despite all the negative news and impact of the pandemic and the state of emergency, this opportunity is a welcome change and a tremendous opportunity to extend the MRLP positive and diverse culture in the default servicing space in the Pacific Northwest.  Building a new foreclosure practice, on a state-of-the-art case management workflow system, supported by one of the longest tenured firms in the industry, will allow us to help clients in the most efficient manner possible when the moratorium lifts.”

Furthermore, MRLP is proud to announce it will now offer its full complement of legal services throughout Texas from its Dallas “Uptown” office.  Mrs. Melody Jones Rickels, the managing partner of MRLP’s non-judicial states, and one of the most respected and recognized women in mortgage servicing, said, “Today, executives and business leaders of banks and non-bank servicers have increasingly made Dallas their center of operations in the US.  I am thrilled at the opportunity to expand into the Lone Star state.  MRLP has a history of successful, responsible expansion.  Texas will be no different.  We look forward to providing exceptional service to our clients in Texas.”

McCalla Raymer Leibert Pierce, LLC’s offices are located in Roswell, GA; Birmingham, AL; Chicago, IL; Dallas, TX; Hartford, CT; Fort Lauderdale, FL; Iselin, NJ; Las Vegas, NV; Long Beach, CA; Orlando, FL; Jackson, MS; New York City, NY; Portland, ME; Portland, Oregon and Bellevue, Washington[1]

 

[1] McCalla Raymer Liebert Pierce, LLP will be the corporate entity operating law firm practices in Washington State and Oregon.

 


 

Orlans (USFN Member - DC, DE, MA, MD, MI, NH, RI, VA) announced that Founder & Executive Chair Linda Orlans was named an award winner of the inaugural #NEXTPowerhouseAward honoring the most influential women in the mortgage industry. The winners are celebrated for being technologically innovative, sharing new ideas and pushing the limits to keep their companies and the industry moving forward.

Linda has been recognized for numerous accomplishments throughout her career. A few highlights include becoming the first woman Chair of the Board of Trustees, Michigan State University College of Law, the inclusion of Orlans PC as a member of the National Association of Minority and Women Owned Law Firms (NAMWOLF)—a highly selective organization of minority and women-owned law firms, being a current member of the United States Supreme Court Bar and the State Bar of Michigan, and the co-founder of Women Executives in Banking (WEB) an organization dedicated to furthering the personal and professional growth of women executives in the banking industry.

A self-made business leader, attorney, pioneer, philanthropist, and influencer, Linda Orlans has built multiple businesses with innovation and compassion at the center. Throughout her career, she has revolutionized the real estate and legal worlds. Well before it was common, Linda introduced the flat fee model and a paperless workflow process that incorporated electronic records into her law practice. Her companies have also been early adopters of time and money saving technology like Remote Online Notarization and eTITLE’s eZTRACKER and eZESCROW, resulting in a better customer experience. As an early adopter of lean methodology and technology, she implemented Lean Six Sigma training for her entire staff resulting in increased process efficiencies and a five-star customer experience.

Linda is an active philanthropist in the community and has established a social responsibility across her companies – actively helping the underserved, as well as championing gender equality.

“I am thrilled to receive this award It is an honor to be recognized with such an esteemed group of successful career driven women e ach of whom strive s to make a positive impact in our companies, communities and the industry," said Orlans.

Orlans also announced that Julie Moran, Senior Executive Counsel, was named an award winner of the inaugural #NEXTPowerhouseAward honoring the most influential women in the mortgage industry. The winners are celebrated for being technologically innovative, sharing new ideas and pushing the limits to keep their companies and the industry moving forward.

Julie is an innovator and trailblazer in the mortgage and legal industries. She began her career as an attorney at a Boston law firm concentrating in transactional real estate. She developed a mortgage banking practice that became one of the largest sources of firm and client growth. As a partner at the firm, she had the privilege of working with some of the nation’s largest banks and loan servicers. Julie was elected as the firm’s first female managing partner at a time when there was only one other female managing partner in Boston.

In 2005, she co-founded WEB (Women Executives in Banking) with fellow industry executives Linda Orlans, also of Orlans PC and Miriam Moore of Servicelink. WEB helps women advance their careers through education, coaching and peer support.

In 2007, Julie joined with Linda Orlans to launch Orlans Moran PC, a 100% women-owned law firm where she oversaw operations as well as the legal and regulatory compliance practice. Under Linda and Julie’s innovative leadership, the firm quadrupled its market share and number of clients by applying Lean Six Sigma concepts to the foreclosure legal process.

Julie is an industry leader and has served on a number of regulatory task forces on mortgage banking issues. She is co-chair of the Legal Issues Committee of the USFN, co-chair of the Financial Services Pac of the National Association of Minority and Women Owned Law Firms (NAMWOLF) and member of the Board of Directors of the MA Real Estate Bar Association. Julie is a frequent author of topical articles of interest to the industry and a speaker on regulatory compliance and current legal issues at both local and national conferences.

“I am honored to receive this esteemed award from an organization that is focused on advancing women in their careers and professional growth," said Moran.

 

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Navigating the Virtual Courtroom

Posted By USFN, Thursday, June 18, 2020
Updated: Wednesday, June 17, 2020

 

by Kip J. Bilderback, Esq.
Millsap & Singer, LLC
USFN Member (KS, KY, MO)

In this time of COVID-19, we continue to see a “new normal” arise to allow our professional work to continue while maintaining as much safety and social distance as possible. E-filing has long been utilized by many courts, and, as an industry, we seem comfortable in utilizing that technology with good internal execution processes in place to assure the quality of the filings. What had not heretofore been utilized as frequently is remote hearings, by telephone or by video.

Regardless of whether the hearing will be video or telephonic, some important considerations should be made. First, understand the protocol your court will be utilizing. Will you call in and be put in a “waiting room” until the judge is ready? Will the court initiate the call? Do you have special software you need to use? If you are dealing with additional technology, you may wish to test out those systems in advance of the meeting. Second, make sure your pleadings and exhibits are in order, properly labeled and appropriately shared with opposing parties and the court. As with all things, you should include everything you need, but be careful not to overdo the documentation in that many people will be handling those documents in line with your argument.

Third if you are a witness or you are using a witness, be sure that you are both “on the same page” with regard to the aforementioned items. Fourth, consider from where you will be attending the hearing. If you are at home, are you in a segregated area to minimize possible interruption by your “work from home colleagues” – dogs, cats, children, spouses or significant others.

With specific regard to telephone conferences, one should be aware that an inability to see removes certain social cues we take for granted. You cannot see whether the judge is annoyed with the length of your argument.

You cannot see a witness’s reaction to a question you may have asked. Consequently, it is important to be vigilant and clear in your communications, using vocal tonality more thoroughly. Also, to avoid confusion or “talking over” another, one should be very courteous to others, making sure no one is speaking before you speak. You may also wish to signal verbally as you complete your portion of a discussion, allowing others the opportunity then to speak. Last, you should try to stay in one place during the entire hearing. Recently the Supreme Court of the United States held oral arguments virtually. At one point in the proceedings, the sound of a toilet flushing was clearly heard in the stream. https://www.npr.org/2020/05/09/852650790/top-5-moments-from-the-supremecourts-1st-week-of-livestreamingarguments

With specific regard to telephone conferences, you should be aware of your surroundings, your lighting and the picture you present in the video frame. Do you want to send a “professional” message by being in front of an attractive bookcase of legal books? Do you want to be in a neutral background, such as in front of an office wall without distractions? Is the light better in one room, or can you put a light on you? If you are in a dark room, you may look more like someone in the witness protection program than an attorney. Be sure to dress in accordance with normal court requirements, including bottoms. It will help keep the feeling of professionalism throughout the proceeding. Last, realize that, in many situations, your video will be in front of everyone at the hearing. Unlike a courtroom, where you might roll your eyes a bit or turn to your client to say something and can hope not everyone will notice, your face will show everything at all times.

Again, as we progress in this world of the “new normal,” we will find more ways to be productive remotely, and in many cases, the well prepared may be even more successful than others.

 

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FHFA Issues Second Moratorium Extension

Posted By USFN, Wednesday, June 17, 2020

The Federal Housing Finance Agency (FHFA) announced Wednesday that Fannie Mae and Freddie Mac will be extending their moratorium on foreclosures and evictions until at least August 31. This is the second time the FHFA has extended the expiration date, after announcing in May that the moratorium would expire on June 30.

The U.S. Department of Housing and Urban Development (HUD) also issued Mortgagee Letter 2020-19, which stated the moratorium applied to “all FHA Title II Single Family forward and Home Equity Conversion Mortgage (reverse) mortgage programs except for FHA- insured mortgages secured by vacant or abandoned properties.”

The move is a continuation of a directive from the FHFA, in which Fannie Mae and Freddie Mac were originally instructed on March 18 to suspend foreclosures and evictions for at least 60 days. The FHFA had enacted the first moratorium in response to the national emergency that was declared on March 13 by President Trump due to the COVID-19 outbreak.

 

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D.C. Superior Court Decision Shows Progress Against Super-Priority Condominium Lien Claims

Posted By USFN, Monday, June 15, 2020

by Gene Kendricke Sanchez, Esq.

Rosenberg & Associates, LLC
USFN Member (DC, MD, VA)

 

Decisions in recent years by the District of Columbia Court of Appeals have tipped the scales in favor of condominium liens over mortgage liens where both liens attach to a property. First, in Chase Plaza Condo. Ass'n v. JP Morgan Chase Bank, N.A., the Court of Appeals held that D.C. condominium foreclosure statutes gave condominium liens a “super-priority” that, when exercised, extinguished even a first-priority mortgage lien. Building on that decision, the Court of Appeals held, in Liu v. U.S. Bank, N.A., that a condo could not willingly waive its super-priority lien in favor of a first-priority mortgage lien. However, a recent decision in D.C. Superior Court, Wells Fargo Bank, N.A., v. Hyun Uk Lee, et al., 2017 CA 007966 R(RP) (D.C. Cir. Feb. 27, 2020), shows one way that the lower court is balancing the equities in favor of mortgage lienholders.

In Lee, the property owners encumbered the subject property with a mortgage lien in 2005. In 2010, the condominium association initiated a foreclosure action for unpaid condominium assessments and recorded a notice of foreclosure sale for the property. At the condominium foreclosure sale that same year, the association bought the property. However, it did not immediately execute its deed. In 2017, Wells Fargo, the beneficiary of the mortgage lien, filed a judicial foreclosure action against the mortgagors in D.C. Superior Court. Two years later, a court-appointed trustee sold the property at foreclosure auction to a third-party. It was only after Wells Fargo’s foreclosure auction that the association finally executed and recorded its foreclosure deed from the 2010 sale. The association then intervened in Wells Fargo’s foreclosure action and filed a counter-claim to quiet title, claiming that the 2010 sale extinguished Wells Fargo’s mortgage lien.

On summary judgment the Court ruled against the association, finding that the quiet title claim was barred by laches. Laches is the legal principle that a claim is barred when the claimant causes an unreasonable delay in bringing its action and the delay causes prejudice on the defendant. Here, the Court found it unreasonable that the association waited over nine years from the 2010 sale to execute and record its deed, especially when the purchase contract had a 30 day settlement requirement.

Further, the association not only waited until after Wells Fargo had filed a foreclosure lawsuit, but waited until after the foreclosure auction took place. The Court was unconvinced by the association’s argument that its recorded notice of foreclosure sale was sufficient notice of ownership to Wells Fargo and that Wells Fargo should have contacted the association to learn about its ownership interest. The Court reasoned that regardless of Wells Fargo’s inaction in contacting the association, D.C. law is clear that only a recorded deed after a condominium foreclosure sale can serve as proof of ownership. The Court also found that the association’s delay prejudiced Wells Fargo, which had incurred costs to maintain the property and pursue its foreclosure action. The Court also found that the delay by the association prejudiced the third-party purchaser at the mortgage foreclosure auction because the purchaser had no notice of the condominium association’s ownership.

The take-away from Lee is that laches is working as an effective defense for mortgage lienholders when faced with a quiet title claim stemming from a super-priority condominium lien. Lee has not gone through appellate review and, therefore, is not binding in D.C. However, it is a positive sign for mortgage lien holders facing aged claims from condo sale purchasers that the lower court is balancing the equities and fairly considering the time, effort, and expense, of enforcing a mortgage lien.

Finally, while the result in Lee provides a remedy for past condo foreclosure sales, it is very clear that current and future condo sales can and will extinguish even a first-priority mortgage lien. Therefore, it is still very important to monitor and take appropriate action when condominium dues fall in arrears in the District of Columbia.

 

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Changes to Florida Surplus Fund Statute: Claim It or Lose It

Posted By USFN, Monday, June 15, 2020

by Nicholas J. Vanhook, Esq. and Jane E. Bond, Esq.
McCalla Raymer Leibert Pierce, LLC
USFN Member (AL, CA, CT, FL, GA, IL, MS, NV, NJ, NY)

Ever since the United States housing market collapse in 2008, when a lender instituted a foreclosure action and obtained a Final Judgment of Foreclosure, the foreclosure sales process was relatively straight forward in Florida.  The property was listed for sale at a public auction, Certificate of Title was issued to highest bidder, typically the lender for a nominal amount, and the property was placed in that lenders book of Real Estate Owned (REO) until it was eventually marketed and sold to the general public.  The primary reason this process was so straightforward was based on one simple fact: The Final Judgment of Foreclosure was for an amount substantially more than what the property was worth.  Since the lender received a credit bid at the foreclosure sale for the value of its judgment, third-party purchasers were rarely the highest bidders at the public auction.   The logic behind this standard course of events is simple.  Why would a third party pay more for a property than what it was worth?  Simply put, they wouldn’t. 

Fast forward over a decade and the process is becoming less standard.  Once again, the reason is based on one simple fact: Property values have not only stabilized over the past decade but have increased to a level that the Final Judgment of Foreclosure obtained by a lender is often for an amount less than the property’s value.  Therefore, those third-party purchasers, who were nowhere to be found ten years ago, are now competitively bidding at foreclosure sales, and the winning bid is often thousands of dollars more than the Final Judgment of Foreclosure.  These surplus funds are then held by the Clerk of Court, pursuant to 45.032, Fla. Stat. until a court order is entered determining how the funds should be distributed.

Once foreclosure sales resume in Florida after the COVID-19 moratorium, this will continue as a very small percentages of Florida homes are underwater. Residential properties are in demand with few being available on the market. Unless there is a significant decline in property values, third party purchasers will continue to bid at foreclosure sales resulting in surplus funds.

In this current era of surplus funds becoming the norm as opposed to the exception, the question is, who is entitled to these funds and what is the proper procedure to ensure they are obtained?  It is well established under Florida law, that any surplus remaining after a foreclosure sale should be paid to the junior lienholders based on their priority as it relates the foreclosed property.  Only after junior liens have been satisfied, can the prior homeowner receive any surplus funds.  General Bank, F.S.B. v. Westbrooke Pointe, Inc., 548 So. 2d 736 (Fla. 3d D.C.A. 1989). 

So, when does a junior lienholder need to file a claim with the court to ensure it does not waive rights to the surplus funds being held by the Circuit Court Clerk?  Simply, within one year of the foreclosure sale. On July 1, 2019, Fla. Stat. 45.032 was amended eliminating the “surplus trustee” and changing the amount of time to file a claim. The surplus trustee was the person appointed by the County Clerk to seek out the prior homeowner, if no surplus claim was filed by any party within the 60 days.  This surplus trustee had one year from the date it was appointed to locate the prior homeowner before those funds were deemed unclaimed property.  Now, the statute simplifies this process by taking away the surplus trustee and stating, any surplus remaining with the Clerk one year after the foreclosure sale is deemed unclaimed property.  From the plain language of 45.032, Fla. Stat., junior lienholders now have up to one year from the foreclosure sale to make a claim for surplus funds.  This is more time than the 60 days which is beneficial to the inferior lien holders giving them additional time to hire an attorney and file a claim.

Many junior lienholders refer the case to counsel as soon as the senior lienholder files their foreclosure. This is the best practice, to allow for monitoring the case through the senior lienholder foreclosure. Counsel appears, answers the complaint, and obtains all pleadings ensuring the inferior lien is protected and any claims for surplus are made. The most prudent course of action is for junior lienholders to make a surplus claim as soon as possible after the foreclosure sale, as other junior lienholders and/or the borrower may also be filing a claim and setting the surplus distribution for hearing prior to the new one-year claim period. If no claim is made within a year, the claim may be lost when the clerk reports the funds as unclaimed property.
 

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Minnesota Appellate Court Doubles Down on Strict Compliance

Posted By USFN, Monday, June 15, 2020

by Paul A. Weingarden, Esq. & Kevin T. Dobie, Esq.
Usset, Weingarden & Liebo PLLP
USFN Member (MN)

 

In navigating the rocky shores of nonjudicial foreclosures, the recent decision in Larsen v. Wells Fargo Bank, No. A19-0952, 2020 WL 1129880 (Minn. App. 2020), has just made life a bit more difficult for practitioners: the Minnesota Court of Appeals vacated a foreclosure sale after finding that the lender gave the mortgagor too much time to redeem.

 

Ever since the landmark decisions of Jackson v. MERS, 770 N.W.2d 487 (Minn. 2009) and Ruiz v. 1st Fid. Loan Servicing, 829 N.W.2d 53 (Minn. 2013), the Minnesota Supreme Court has held that lenders and practitioners of Minnesota foreclosures must strictly comply with the requirements of the nonjudicial foreclosure process or risk avoidance of a sale.  In the case of minor irregularities, based on precedent, many hoped that mortgagors might have to show a modicum of prejudice before courts reach the drastic conclusion to avoid an otherwise proper sale.  In Larsen, a recent unpublished opinion, the Minnesota Court of Appeals reversed a trial court and ruled that where the foreclosing lender published a redemption period double that to which the mortgagor was legally entitled, despite no prejudice to the mortgagor, the nonjudicial sale was void.

 

The facts in the case are fairly straightforward. After defaulting on her mortgage loan, Wells Fargo commenced a nonjudicial foreclosure proceeding.  When the title search revealed a junior mortgage in favor of the United States, Wells Fargo's counsel drafted and published a foreclosure sale notice advertising a 12-month redemption period, six months longer than the period the mortgagor was otherwise entitled by Minnesota statutes.  In our state, most properties are entitled to a six-month redemption, with 12 months being reserved for agricultural properties, much older mortgages, and those loans with steep equity.

 

Wells Fargo's counsel took this action relying on 28 U.S.C. § 2410(c), which provides for a one-year redemption period for the United States from a foreclosure sale in judicial proceedings and felt the longer period was required to avoid redemption issues caused by giving 6 months to the mortgagor. The county sheriff ultimately sold the property to Wells Fargo at a nonjudicial sheriff’s sale subject to the 12-month redemption period. The mortgagor sued, alleging the sale was invalid because she received a longer redemption period than allowed by statute, i.e., Wells Fargo gave her an additional six months to possibly redeem from the sale and to stay in her home before the foreclosure purchaser could commence an eviction proceeding. The trial court determined that Wells Fargo’s actions were valid and dismissed the case. The mortgagor appealed.

 

In reversing the trial court decision, the appellate court decided that 11 U.S.C. § 2410 did not mandate a change from six to 12 months for either the notice or the sale.  The court noted that the statutory provision establishing the six-month redemption period in Minnesota statutes 580.23 and required in the publication under Minnesota statutes 580.04(a)(6) applied to the mortgagor’s rights, not to those of junior lienholders. The court followed with a review of the strict compliance standard in Jackson v. MERS and Ruiz v. 1st Fid. Loan Servicing governing nonjudicial mortgage foreclosures and explained that although the mortgagor received a longer period of time to remain in the home and perhaps redeem, Minnesota law mandates strict compliance with the applicable foreclosure statutes. The court ultimately held the foreclosure sale was void because Wells Fargo gave her too much time to redeem, noting that the mechanics of redemption by junior liens after 6 months was known to any redeeming creditors or could be fixed by legislative amendment if truly needed.

 

Usset, Weingarden & Liebo has always foreclosed nonjudicially using the six-month redemption period despite the existence of a junior mortgage in favor of the United States, and the United States has not objected or asserted a right to a one-year redemption period.  Although not explicitly stated in 11 U.S.C. § 2410, the text of that statute clearly implies that the 12-month redemption period applies to foreclosures by judicial action, but a judicial action is not required.  Where the United States has a junior mortgage and the lender commences a judicial foreclosure, the lender may name the United States as a defendant and the United States is entitled to a 12-month redemption. But the choice of forum is permissive and where a lender forecloses under state nonjudicial foreclosure statutes, the United States is not guaranteed the 12-month redemption period. Instead, state law applies. See U.S. vs. Brosnan, 363 U.S. 237 (1960).

 

Finally, in Larsen, the court did not find persuasive Wells Fargo’s argument that the sale was valid because the mortgagor was not prejudiced by the longer redemption, despite cases holding otherwise, e.g., Wells Fargo v. Terres, 2008 WL 3287817 (Minn. App 2008) (amending sheriff’s certificate where no prejudice to mortgagor); Young v. Penn Mutual Life, 265 N.W. 278 (Minn. 1936)(overstated amount due by $116.55 not prejudicial to mortgagor and sale was valid). Decisions like Larsen serve as a reminder that lenders and their counsel will be subject to ever more scrutiny and the phrase “Get it Right" will be with us for the foreseeable future.  Lenders and Minnesota attorneys are advised to follow the strict compliance standard of Minnesota Statute 580 on each file or risk a void sale. 
 

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Oklahoma Foreclosure Judgments Subject to Dormancy Statute

Posted By USFN, Monday, June 15, 2020

by Kim Pogue Jenkins, Esq.

Baer & Timberlake, P.C.

USFN Member (OK)

 

The Supreme Court of Oklahoma has issued an opinion holding that foreclosure judgments are subject to Oklahoma’s five-year dormancy statute. In HUB Partners XXVI, Ltd. V. Barnett, 453 P.3d 489 (2019), the Court also held that the defendant’s payments made during a Chapter 13 bankruptcy do not toll or extend the dormancy statute.

 

Facts of the Case
Plaintiff/Appellant HUB Partners XXVI, Ltd. (“HUB”) obtained a foreclosure judgment against Defendant/Appellee Thomas Barnett (“Barnett”) on February 24, 2011 in the District Court of Oklahoma County, Case No. CJ-2010-6158. HUB timely issued Execution on its judgment, but Barnett filed a Chapter 13 bankruptcy on March 4, 2011, thereby staying the foreclosure action. HUB received and applied payments from the Bankruptcy Trustee until the Chapter 13 case was dismissed by the Bankruptcy Court on July 13, 2016, for Barnett’s failure to make plan payments.

 

HUB then issued its Alias Execution on the foreclosure judgment on August 19, 2016, and its Second Alias Execution September 22, 2016. The real property was sold at Sheriff’s Auction on December 1, 2016, but Barnett filed his motion to release the judgment and to vacate the Sheriff’s Sale on November 30, 2016. In his motion, Barnett contended that the judgment rendered on February 24, 2011, was unenforceable under Oklahoma’s dormancy statute, 12 O.S. §735.

 

In its response, HUB first argued that Barnett made payments on the judgment through the Chapter 13 Plan, and each of those payments extended the statute of limitations. The final payment made by the Bankruptcy Trustee was on August 1, 2016, so HUB claimed the five-year statute of limitations began on that date. HUB also maintained that the bankruptcy stay tolled the statutory period, relying on Lee v. Epperson, 32 P.2d 309 (1934), which states:

 

“Where the character of legal proceedings is such that the law restrains one of the parties from exercising a legal remedy against another, the running of the statute of limitations applicable to the remedy is postponed, or if it has commenced to run, is suspended, during the time the restraint incident to the proceedings continues.”

 

HUB also claimed that it timely issued its Alias Execution pursuant to 11 U.S.C. §108(c)(2). This provision of the Bankruptcy Code provides that if the statute of limitations had not expired prior to the bankruptcy filing, then it would not expire until “30 days after notice of the termination or expiration of the stay. . .” Although HUB issued its execution 31 days after the Bankruptcy Court sent notice of the dismissal of the case, HUB maintained that the Federal Rules of Civil Procedure allowed it an additional three days, thereby making its Alias Execution a timely issuance under the dormancy statute.

Finally, HUB argued that the dormancy statute did not apply to foreclosure judgments, per Methvin v. Am. Sav. & Loan Ass’n of Anadarko, Okl., 151 P.2d 370 (1044).

The trial court ruled that the foreclosure judgment was dormant under 12 O.S. §735, that the bankruptcy stay did not toll the statute of limitations, and that HUB missed the 30-day extension under 11 U.S.C. §108(2).  The trial court also ruled that the note and mortgage merged into the judgment. HUB timely appealed these rulings, and the Supreme Court of Oklahoma granted certiorari. The two issues considered by the Court were (i) whether the foreclosure judgment was dormant; and (ii) whether the mortgage merged with the foreclosure judgment.

Foreclosure Judgments are Subject to the Dormancy Statute
12 O.S. §735 reads as follows:

 

A.    A judgment shall become unenforceable and of no effect if, within five (5) years after the date of filing of any judgment that now is or may hereafter be filed in any court of record in this state:

(1)   Execution is not issued by the court clerk and filed with the county clerk as provided in Section 759 of this title;

(2)   A notice of renewal of judgment substantially in the form prescribed by the Administrative Directors of the Courts is not filed with the court clerk;

(3)   A garnishment summons is not issued by the court clerk; or

(4)   A certified copy of a notice of income assignment is not sent to a payor of the judgment creditor.

The statute only provides for two exceptions: judgments against municipalities and child support judgments.

Previously the Oklahoma Supreme Court held that a foreclosure judgment did not expire under the statute. See Methvin, above, and Anderson v. Barr, 62 P.2d 1242 (1936). In its de novo analysis of the issue, the Court in this case defined a foreclosure judgment as “the order determining the amount due and ordering the sale to satisfy the mortgage lien.” Since foreclosure judgments do not fall under the two excepted categories, the Court reasoned that foreclosure judgments are within the scope of the statute. In support of this reasoning the Court cited North v. Haning, 229 P.2d 574 (1950), which held that a judgment foreclosing a special assessment lien was subject to the dormancy statute. Extending North to the foreclosure of a mortgage, this Court held, “HUB’s foreclosure judgment is dormant.”

The Court also rejected HUB’s argument that payments applied through the Chapter 13 plan extended the limitation period, quoting Chandler-Frates & Reitz v. Kostich, 630 P.2d 1287 (1081), “(i)n the absence of a statute to the contrary a partial payment will not prevent the running of a dormancy statute.” The Court also noted that the legislature did not carve out an exception to the statute for partial payments, and concluded its analysis of this issue by holding, “We conclude HUB’s payments under the bankruptcy plan did not prevent the dormancy period from running.”

Mortgage does not Merge into Foreclosure Judgment
After deciding that the foreclosure judgment was dormant, the Court went on to analyze whether the subject mortgage merged into the dormant judgment. The Court addressed this question in Anderson and Methvin, cited above. In Anderson the Court examined the very nature of a mortgagee’s rights, finding that “he has a property right in the premises, the value of which is in proportion to the amount which the mortgage bears to the value of the property.” The foreclosure judgment was described as “no more than a direction that the interest and rights of all parties be sold; it is the sale that changes any such rights or interests. A mortgage lien is not merged into a decree of foreclosure, nor is it extinguished by the mere rendition of a decree of foreclosure. It is extinguished only by a sale.” This understanding that the mortgage does not merge into the Court confirmed the judgment in Methvin, stating “a mortgage lien on realty is not merged nor extinguished by a foreclosure decree or judgment.”  In keeping with these prior rulings, here the Court again held that “the mortgage lien did not merge into HUB’s foreclosure judgment.”


In summary, the Court in this case held as follows:

 

“The dormancy statute extinguished HUB’s foreclosure judgment. However, the foreclosure judgment did not extinguish the mortgage lien. The lien can only be extinguished by a sale and application of the proceeds to the judgment, which has not yet occurred. . . . We hold that the dormancy statute does not operate to invalidate the mortgage, which continues to secure the obligation owed by Barnett to HUB; the district court erred in finding that the mortgage merged into the dormant judgment. HUB may prosecute a new action for a judgment based upon its mortgage lien.”

HUB has, with leave of Court, filed its Second Amended Petition in the foreclosure. Oklahoma attorneys and lenders will want to monitor as this case progresses through the District Court.

 

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Washington DC Enacts Additional COVID-19 Emergency Legislation

Posted By USFN, Monday, June 15, 2020

by James Clarke, Esq.

Orlans PC

USFN Member (DC, DE, MA, MD, MI, NH, RI, VA)

On May 5, in response to the COVID-19 crisis, Washington, District of Columbia passed emergency legislation relative to foreclosures of mortgages and condominium liens. Bill 23-0743 is titled “Foreclosure Moratorium Emergency Amendment Act of 2020, approved by the mayor on May 27, 2020 as Act 23-0318. The law is effective upon approval by the mayor but expires 90 days after enactment or August 25, 2020.  

The legislation amends the D.C. Official Code §42-815 and creates a moratorium on initiating or conducting a judicial foreclosure or foreclosure under power of sale (nonjudicial) of a “residential mortgage” while a public health emergency is in effect or for sixty days thereafter. While the current state of emergency has been extended to July 24, the legislation ceases to have effect after August 25.

The legislation also prohibits initiating or conducting the foreclosure of a condominium lien on a residential unit while a public health emergency is in effect or for 60 days thereafter. The moratorium excludes vacant and tenant occupied condominiums.

Click here for copies of the legislation:
https://lims.dccouncil.us/downloads/LIMS/44604/Signed_Act/B23-0743-Signed_Act.pdf

 

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Fannie Mae, Freddie Mac Announce Moratorium Extensions

Posted By USFN, Friday, May 15, 2020

Fannie Mae and Freddie Mac both announced today that they will be extending a moratorium on foreclosures and evictions through June 30.

In their announcement, Freddie Mac stated that servicers “…must suspend all foreclosure actions, including foreclosure sales, through June 30, 2020. This includes initiation of any judicial or non-judicial foreclosure process, move for foreclosure judgment or order of sale. This foreclosure suspension does not apply to Mortgages on properties that have been determined to be vacant or abandoned.”

Fannie Mae specified, “During the period of the extension, servicers may not, except with respect to a vacant or abandoned property, initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure sale. This suspension does not apply to mortgage loans secured by properties that have been determined to be vacant or abandoned.

We generally require servicers to file motions for relief from the automatic stay in bankruptcy cases upon certain milestones. In light of the CARES Act and other impacts resulting from the COVID 19 National Emergency, on Apr. 8, 2020, we temporarily relieved servicers of the obligation to meet these timelines. We are continuing this temporary suspension. Servicers must continue to work with their bankruptcy counsel to determine the appropriate time to file such motions”

The move is a continuation of a directive from the Federal Housing Finance Agency (FHFA), in which the two entities were instructed on March 18 to suspend foreclosures and evictions for at least 60 days. The FHFA originally enacted the moratorium in response the to the national emergency that was declared on March 13 by President Trump due to the COVID-19 outbreak.  

Fannie Mae Lender Letter (LL-2020-02)

Freddie Mac Bulletin 2020-16: Temporary Servicing Guidance Related to COVID-19

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Weathering the Storm: How Mortgage Servicers and Default Firms can Work Together to Survive COVID-19 Moratoria

Posted By USFN, Tuesday, May 5, 2020

 

by Christianna Kersey, Esq., Richard Solomon, Esq., Michael McKeefery, Esq. and Kevin Hildebeidel, Esq.
Cohn, Goldberg & Deutsch, LLC
USFN Member (DC, MD)

According to the World Health Organization, over 7 million cases of COVID-19 have been reported worldwide to date. With no vaccine and no way of knowing when the curve will completely flatten, federal and local governments have taken drastic and unprecedented steps to ease the burden on borrowers affected by the virus. Moratoria on residential foreclosure actions imposed by various private investors, government sponsored entities and state and local governments have dramatically altered the needs of foreclosure servicing agents. These unparalleled governmental actions have both mortgage servicers and default law firms in a state of flux. With needs ever-changing, there is one common goal: withstand the storm.

Since the COVID-19 pandemic was first declared in the United States, there have been numerous federal and state moratoria imposed on both foreclosure and eviction actions.

On March 25, 2020, the U.S. Senate passed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The U.S. House passed the bill on Friday, March 27, 2020, and President Trump signed the bill into law that same day. The more stringent CARES Act foreclosure moratorium supplanted all the prior federal moratoria that had been imposed between March 18, 2020 and March 19, 2020.

Section 4022(c)(2) of the CARES Act (“Foreclosure Moratorium and Consumer Right to Request Forbearance”) provides “Except with respect to a vacant or abandoned property, a servicer of a Federally backed mortgage loan may not initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60-day period beginning on March 18, 2020.” The CARES Act defines a “Federally backed mortgage loan” as any loan that is secured by a first or subordinate lien on real property (including individual units of condominiums or cooperatives) designed principally for the occupancy of from one to four  families that is either insured by the Federal Housing Administration or the National Housing Act, guaranteed under Housing and Community Development Act, the Department of Veterans Affairs, or the Department of Agriculture, made by the Department of Agriculture or purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.

On April 8, 2020, Fannie Mae issued an update to its previously issued LL-2020-02 indicating that “In response to the CARES Act, we are acknowledging that the servicer must now suspend foreclosure-related activities in accordance with the requirements of the CARES Act,” and Freddie Mac issued an update to Bulletin 2020-10, which indicated “As provided in the CARES Act, Servicers must suspend all foreclosure actions, including foreclosure sales, through May 17, 2020. This includes initiation of any judicial or non-judicial foreclosure process, move for foreclosure judgment or order of sale. This foreclosure suspension does not apply to Mortgages on properties that have been determined to be vacant or abandoned.”

Fannie Mae further indicated, “Fannie Mae generally requires servicers to file motions for relief from the automatic stay in bankruptcy cases upon certain milestones. In light of the CARES Act and other impacts resulting from the COVID-19 National Emergency, Fannie Mae is temporarily relieving servicers of the obligation to meet these timelines. This temporary suspension shall be in effect for not less than the 60-day period beginning on Mar. 18, 2020.” Freddie Mac had nearly identical language in its Bulletin 2020-10.

It should be noted that the CARES Act specifically exempts “vacant or abandoned” properties.

On May 14, 2020, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac are extending their moratorium on single-family mortgage foreclosures and evictions (at that time, set to expire on May 17th) until at least June 30, 2020.  Likewise, on that same date, HUD issued Mortgagee Letter 2020-13, VA issued Circular 26-20-28, and USDA issued an announcement, granting  similar extensions of the CARES Act moratoria.

However, notwithstanding the CARES Act and various federal moratoria, states, of course, may have more stringent prohibitions in place. Maryland and the District of Columbia are two jurisdictions that have issued emergency measures and guidance in addition to the federal prohibitions. On March 18, 2020, the same day as most of the federal mandates, the Court of Appeals of Maryland issued an Administrative Order indicating that “Those foreclosures of residential properties and foreclosures of the rights of redemption of residential properties pending in the circuit courts shall be stayed effective immediately; and Residential eviction matters pending in the District Court of Maryland and all pending residential eviction orders shall be stayed effective immediately; and New foreclosure of residential property, foreclosure of rights of redemption after a tax sale, and residential evictions shall be stayed upon filing.”

On March 25, 2020, the Court of Appeals of Maryland issued an Administrative Order rescinding its prior order, and indicating that “All proceedings related to foreclosures of residential properties, … pending in the circuit courts shall be stayed effective immediately, … ; and New foreclosures of residential property, … , and all other actions for possession (residential evictions) shall be stayed upon filing; … .” The only exception being “Where the parties can demonstrate that a delay of a residential foreclosure will place an undue burden on the defendant, a consent motion to lift stay to allow ratification, signed by the defendant, shall be considered on an expedited basis.” Unlike with the federal mandates, there was no specific end date for the March 25, 2020 Maryland Order (like the earlier order), and it merely stated that the order “will be revised as circumstances warrant.”  However, on May 22, 2020, the Court of Appeals issued an Administrative order lifting the suspension of foreclosure, evictions and other ejectments imposed by its prior orders, effective July 25, 2020. So, currently, notwithstanding the federal orders, all post-docket action in Maryland is currently stayed until that time (unless further revised).

Conspicuously, in the Maryland orders, there is no exception, as with the federal mandates, for vacant or abandoned properties. The Maryland orders leave open the possibility of sending the Maryland Notice of Intention Foreclose, in addition to being able to at least file a foreclosure case. However, on April 3, 2020, the Governor of Maryland issued Executive order 20-04-03-01, indicating that “The Commissioner [of Financial Regulation of the State of Maryland] is hereby ordered to suspend the operation of the Commissioner’s Notice of Intent to Foreclose Electronic System, and to discontinue acceptance of Notices of Intent to Foreclose until the state of emergency is terminated and the catastrophic health emergency is rescinded.” This had the practical effect of putting a stop to nearly all foreclosure related activity in the State of Maryland from the very beginning of the process to the very end.  Basically, at the current time, the only action permitted on Maryland residential foreclosure matters is the bare filing of foreclosures based on Notices of Intent to Foreclose (“NOI”) sent prior to the Governor’s order suspending the NOI registration database.

In the District of Columbia, the Chief Judge of the Superior Court initially continued all foreclosure hearings and stayed all evictions before May 1, 2020, and the Court of Appeals canceled all oral arguments before May 31, 2020.  The Mayor issued a series of Emergency Orders which stopped all foreclosures and evictions, which were later extended to June 8, 2020 (Order 2020-066).  On May 27, 2020 the Mayor signed B23-0743, the Foreclosure Moratorium Emergency Amendment Act of 2020. The Act prohibits initiation of or conduct of a residential mortgage foreclosure while a public health emergency is in effect or for sixty (60) days thereafter.  The Act makes a similar provision for condominium foreclosures but only if it is owner occupied or occupied by an heir or beneficiary for a certain period of time if the owner is deceased.

The Council also passed legislation prohibiting evictions and requiring mortgage companies to offer 90-day deferrals of payments.  What emerged was D.C. Act 23-286, which excepted foreclosures which had already been initiated, or where the acceleration had already been exercised, before March 11, 2020.  All others, without regard to the type or nature of the loan (residential and commercial included) will have to comply with the Commissioner of the Department of Insurance, Securities and Banking (“DISB”) to grant a 90-day deferment and waive any late fees, processing fees or other fees accrued during the emergency.

Servicers cannot report delinquency or other derogatory information to credit agencies as a result of the deferral.  Servicers are required to approve all applications where the borrower demonstrates a financial hardship and agrees to pay within a “reasonable” time.  That length of time is defined as either the time which is agreed by the parties or, if there is no agreement, five years after the end of the deferment period or the original term of the loan--whichever is earlier.  No lump sums can be required as a part of the deferral.  Servicers will need to take both the date of acceleration or filing and the new requirements into account before proceeding in the District.

The Act also addressed debt collection generally.  On April 24, 2020 the Office of the Attorney General of the District of Columbia provided guidance on the debt collection provisions and how they would interpret the same.  While the entire guidance is recommended reading to those who are interested, the major points are: the limitations last for the length of the Mayor’s Emergency Declaration and 60 days beyond; attempts to initiate contact with debtors in connection with debt collection are prohibited; and no suits for collection or threats of suits for collection may be issued during the provided term.  Repossession activity must also be halted

Virginia, a non-judicial state, is normally considered very “hands-off” when it comes to foreclosures. On March 30, 2020, Governor Northam issued Executive Order 55, a “stay at home” order which enumerated items for which people could leave their home.  The Order invoked VA Code Sec. 44-146.17 and threatened a Class 1 misdemeanor for violations of the Order.  Calling or attending foreclosure sales was not specifically listed among the enumerated items, leading one to believe it is not permitted.  Moreover, it was suggested that sales might be chilled if bidders could not lawfully attend or were deterred from attending.  The Order states it will remain in effect for 10 weeks, until June 10, 2020, unless amended or altered.  Courts were effectively closed, with each jurisdiction defining what essential functions would be handled during the emergency.

The primary focus of servicers during this unprecedented period has been, and will likely continue to be, loss mitigation assistance.  While foreclosure actions are on mandated holds, servicers are inundated with requests for loss mitigation assistance, including, but not limited to, requests for loan modification, repayment plans, forbearance agreements, deeds in lieu of foreclosure and short sales.  Servicers need to ensure that they not only compile the information and/or documentation necessary to fully review borrowers for any and all applicable loss mitigation alternatives to foreclosure, but servicers must also ensure that they are complying with the Consumer Financial Protection Bureau (“CFPB”) regulations regarding loss mitigation requests.  See 12 C.F.R. § 1024.41.  Furthermore, servicers need to review borrowers for eligible loss mitigation options, and issue decisions regarding each application.  During this entire process, servicers must ensure that they are fully compliant with all applicable CFPB guidelines and local regulations.  Due to the expected significant increase in requests for loss mitigation assistance, servicers may be hard pressed to timely review and respond to loss mitigation applications within the prescribed CFPB or local deadlines.

Servicers will also likely experience a significant increase in volume to their call centers.  As unemployment increases to historic levels, and as many Americans continue to be unsure about their economic future, borrowers will likely contact servicers’ call centers to discuss mitigation of any mortgage loan default, and alternatives to the normal repercussions of such default, i.e. foreclosure.  Borrowers will also contact the servicers’ call centers to determine the current status of their loan and to proactively inquire as to what options are available to them if income streams are impacted by the current pandemic.  All of these factors lead to a serious need for servicers to keep their call centers fully staffed with knowledgeable and experienced individuals who can answer borrowers’ inquiries and who can effectively and accurately usher borrowers through the loss mitigation process.  Servicers must ensure that they have plans in place to safeguard their call centers from being overwhelmed with borrower inquiries.

It may now seem far off, but, at some point not in the too distant future, the imposed moratoria will all be lifted.  When that occurs, it will behoove many servicers to be ready to proceed with files that have been on hold for a significant period of time.  As a result, it is important for foreclosing servicers to focus upon drafting and preparing necessary documentation during these mandated foreclosure holds.  Information and documentation that is needed in order to send out any state or contractually mandated notices that are required prior to initiating foreclosure, or to file first legal, can be completed and submitted to local foreclosure counsel while foreclosure holds are still in full effect.  Ensuring that such documentation is ready will guarantee that servicers and local law firms can work quickly to proceed with foreclosure actions once they are able to do so.

Furthermore, it is very important for servicers to gather information from their various local foreclosure counsel on what the foreclosure restrictions are for each state and/or jurisdiction.  While foreclosure moratoria are in place, servicers can determine what actions are legally permissible in each state to ensure that they are proceeding with their respective portfolios in a practical and legally responsible manner, and to ensure that they are prepared to proceed with foreclosure actions once the moratoria are lifted. 

During these uncertain times, the primary focus of local foreclosure counsel is to assist servicing clients with their ever-changing needs. Most law firm employees and attorneys have a significant amount of experience, that, in many cases, spans decades and covers the entire default process. Unfortunately, at the moment, many of these knowledgeable folks are sitting idle, as the numerous moratoria have brought default legal services to a screeching halt.

While foreclosure actions are on mandated holds, and requests for loss mitigation assistance continue to grow, experienced law firm staff could undoubtedly assist servicers with the processing and drafting of the loss mitigation documents such as loan modifications, repayment plans, forbearance agreements, deeds in lieu of foreclosure and short sale agreements.  Not only would servicers have the benefit of highly experienced and knowledgeable staff drafting documents, but there would also be attorney involvement each step of the way.  Since local counsel have considerable experience with CFPB guidelines and local loss mitigation laws, local firms can also ensure that servicers are fully compliant with all guidelines, laws and rules applicable to the loss mitigation process.  Local foreclosure counsel can also be tapped as a well-versed intermediary with regard to short sale communications, as interacting with borrowers, realtors and opposing counsel are all routine law firm functions. Law firm employees know the right questions to ask and how to properly communicate this information to servicers. Further, most firm employees and attorneys already have relationships with individuals at the servicing companies, so communication should be relatively seamless. Shifting some, or all, of this burden to local firms conserves resources for the variety of other loss mitigation activity which must be performed by the servicer.

As indicated above, servicers have to ensure that they have plans in place to prevent their call centers from being overwhelmed.  In addition to assistance with loss mitigation, local counsel can be sourced as local call center support. Firms have been thoroughly vetted and are already integrated into numerous servicing platforms. Firm employees could quickly direct calls to the proper individuals within each servicing entity, benefitting the borrower by saving time, while also alleviating the servicers’ need to hire and vet additional staff. This would ultimately reduce out of pocket costs to the servicer. 

Another area where existing default operations should focus, is on pre-sale documentation. In more restrictive jurisdictions it is important for foreclosing servicers to carefully consult with local counsel on drafting and preparing necessary documentation to facilitate expedited first legal filing once moratoria are lifted. It is said that “proper planning prevents poor performance,” so pre-planning this process in conjunction with local law firms will minimize legal issues and restart time. Local counsel are experienced in their respective jurisdictions and can gather the necessary information to place each case in a proper posture for filing quickly once the moratoria lift.  Much of this information can be collected while holds are still in place. Substitutions of trustees can be executed, assignments can be executed and made ready for recording, and assignments can even be recorded in jurisdictions that have E-recording.  Title curative actions can proceed and probate petitions can be filed for deceased borrowers. In certain circumstances, under the CARES Act, where properties are vacant, the foreclosure process can continue, if permitted by state law. Servicers should communicate with counsel in various jurisdictions to see if the state moratoria are more restrictive. If they are not, counsel could assist with verification of vacancy on properties, to push the process forward.   Ensuring that such information and documentation is ready and being processed will ensure that servicers and local law firms can work quickly to move forward with foreclosure actions once they are able to do so, and will mitigate the shock to those departments when foreclosures resume.

Finally, while it remains very important for servicers to understand what actions are legally permissible in every jurisdiction, it is equally important to ensure that they are prepared to proceed with foreclosure actions once the holds are lifted. Although it may be difficult to shift perspectives to think of the delay as beneficial, in states where servicers have been given time to prepare, servicers should maximize that preparedness in cooperation with the local law firms.

We do not have a crystal ball and we do not know what the future holds for the default industry, but what we do know is that servicers and counsel can work in concert to prepare for the many shared challenges facing both before and after the lifting of the moratoria imposed as a result of the COVID-19 pandemic.

 

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