District of Columbia Amends Rules Regarding the Foreclosure Mediation Program

• April 3, 2014
• Anna DeSimone

by: Lee Greenberg

The District of Columbia Department of Insurance, Securities and Banking recently amended its rules regarding the foreclosure mediation program. The amended rules clarify the operation of the foreclosure mediation program which assists homeowners and provides, where appropriate, an alternative to foreclosure. The rules can be found at Chapter 27C of Title 26 of the District of Columbia Municipal Regulations and are effective immediately.

In general, the amended rules provide additional time for the parties to gather needed documentation, increase the time during which lenders and borrowers may take certain actions and clarify when the pre-foreclosure mediation process is complete. Below is a summary of some of the important amendments.

Notice of Default on Residential Mortgage

A Notice of Intention to Foreclose a Residential Mortgage shall be null and void with respect to a foreclosure of a residential mortgage unless a Notice of Default on Residential Mortgage is mailed to each borrower and the lender receives a Final Mediation Certificate and records the Final Mediation Certificate at the District of Columbia Office of the Recorder of Deeds, prior to or contemporaneously with recording the Notice of Intention to Foreclosure a Residential Mortgage.

The amended rules require the Notice of Default on Residential Mortgage and the Mediation Election Form (FORM FM-2) to be recorded with the District of Columbia Office of the Recorder of Deeds within ten business days of the date of mailing of the Notice of Default on Residential Mortgage, unless the Mediation Administrator concludes that there was good cause for failing to record these documents within the required period of time.

Mailing of Notice of Default on Residential Mortgage

The lender shall send to the Mediation Administrator by electronic mail to DISB.mediation@dc.gov
a copy of the Notice of Default on Residential Mortgage that was sent to the borrower(s) within two business days of the mailing date.

Administrator, may reschedule a scheduled mediation upon no less than two business days’ notice to each mediation party if the Mediation Administrator or Mediator determines that is in the public’s best interest to reschedule the mediation. The Mediation Administrator or Mediator shall consult with the mediation parties with respect to the new time for the rescheduled mediation.

• Evaluate the eligibility of the borrower(s) for alternatives to foreclosure including, but not limited to, reinstatement, loan modification, forbearance, short sale, and a deed in lieu of foreclosure;
• In considering a loan modification, evaluate the eligibility of the borrower(s) for each loan modification program applicable to the residential mortgage in default and include an analysis pursuant to the Home Affordable Modification Program and the Federal Deposit Insurance Corporation’s Loan Modification Program;
• Offer the borrower(s) a loan modification at the best terms available for a loan modification if the net present value of receiving payments pursuant to a modified mortgage loan is greater than the anticipated net recovery following foreclosure based on a calculation using the Federal Home Affordable Modification Base Net Present Value Model or the Federal Deposit Insurance Corporation’s Loan Modification Program;
• If the loan has been sold to a third party investor and the loan servicing agreement permits, offer the borrower(s) a loan modification at the best terms available for a loan modification if the net present value of receiving payments pursuant to a modified mortgage loan is greater than the anticipated net recovery following foreclosure based on a calculation using the Federal Home Affordable Modification Base Net Present Value
• Model or the Federal Deposit Insurance Corporation’s Loan Modification Program.

Information Required for Mediation

• Schedule the matter with another Mediator for one additional mediations session if there is a reasonable likelihood the mediation parties will be able to reach a settlement agreement, or issue a Preliminary Mediation Certificate if the lender participated in the mediation in good faith;
• Assess any applicable penalty against the lender, and issue a Preliminary Determination of Bad Faith if the lender did not participate in the mediation in good faith; or
• Cancel the mediation and issue a Preliminary Mediation Certificate if the borrower(s) did not participate in the mediation in good faith.

• The name and address of the borrower(s) of the property, and his or her telephone number, if known;
• The identification of the property by address;
• The lot and square number or the parcel number of the property;
• The date on which the security instrument was recorded in the District of Columbia Recorder of Deeds, and the security instrument number;
• The name, address, and telephone number of the maker of the note secured by the security instrument;
• A description of the property;
• The name, address, and telephone number of the holder of the note;
• The name, address, and telephone number of the person to call if the borrower(s) wishes to stop foreclosure;
• The current balance owed on the note, the minimum amount required to cure the default obligation, and the total amount of fees and costs required to cure the default obligation as of the date of the Notice of Intention to Foreclose on a Residential Mortgage, and an estimate of other fees or costs reasonably expected to be incurred through the fifth business day prior to the date of sale to be paid in order to cure the default;
• The time, date and location of the sale of the real property; and
• Provision for a notarized certification by the note holder, or the preparer that the original Notice of Intention to Foreclose a Residential Mortgage has been sent to the borrower(s) by first-class certified mail, return receipt requested, and by first-class mail, and that the note holder understands that no foreclosure sale may take place until at least thirty days after a copy of the notice has been recorded in the District of Columbia Recorder of Deeds.

Tags: District of Columbia, State Mortgage Compliance | Comments Off on District of Columbia Amends Rules Regarding the Foreclosure Mediation Program

• Anna DeSimone
• Principal
• Lexington, MA

• 781-402-6415

Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.