Greater Protections Against Foreclosure

On May 5, 2011, Representative Miller of North Carolina along with Mr. George Miller of California, Mr. Turner, Mr. Conyers and Mr. Al Green of Texas introduced a bill in the House of Representatives that serves to provide greater protection to citizens facing bankruptcy with regard to foreclosure on a home. The bill is intended to prevent foreclosure fraud. It will require mortgage servicers to remain current with homeowners insurance even if escrows are not available. The legislation will also provide for a clear path throughout the foreclosure process so that paperwork is handled by having adequate staffing in place in departments handling foreclosure and requiring an electronic record of each document received or issued throughout the process.

For instances when the mortgage is sold even while foreclosure or modification procedures are underway, the bill requires the new servicer assuming the loan to continue to move through the modification procedure or foreclosure at the same point at which it stood with the prior servicer. It also requires subsequent servicers to honor modification agreements created by the prior servicer.

When payments are received, subsequent requests for payment will be required to list all payments received and will detail how payments were applied, whether to fees, interest and/or principal due. If servicers change and payments are not credited, the new servicer is disallowed from marking the payment late or assessing late fees, which are merely the result of the transfer of the loan, as well.

Overall, this pending bill will require that the loan or mortgage servicer provides detailed paperwork and transaction information to consumers. It will provide for fair and transparent application of payments made and will protect homeowners from suffering the results of the sale of mortgages undergoing modification or foreclosure proceedings.

Disclaimer: This blog is for informational purposes only and does not establish a client-attorney relationship. Consult with an attorney before taking action on any information found herein as individual circumstances may affect the applicability of information provided. Call The Law Office of Michael Riley at 508-405-0831 with any questions.