Ohio Creates the D.O.L.L.A.R. Deed Program
Ohio has created a program which provides a loss mitigation alternative for borrowers in default on their mortgage. This creative program gives those struggling to pay their mortgages an unconventional way to maintain and reclaim rights and possession of their real property. Sections 5315.01, 5315.02, 5315.03, 5315.04, and 5315.05 of the Revised Code create the D.O.L.L.A.R. Deed Program.
Qualify for the program
In order to qualify for the D.O.L.L.A.R. Deed Program the mortgagor in default must submit an application and a request for modification and affidavit form developed under the home affordable modification program, the applicant must occupy the residence and his or her front-end and back-end debt-to-income ratios must fall below the current ratios set for the home affordable modification program. The lender is not required to participate in the program, but must respond to the applicant within 30 days.
Program approval
Once a lender approves the borrowers application for the D.O.L.L.A.R. Deed Program, a deed in lieu of foreclosure must be executed that transfers the borrower’s right, title, and interest in the real property and rights associated therewith. Included in the deed shall be a notarized estoppel affidavit that affirms: the mortgage and title to the real property are not merged, the lender retains its lien position, the transfer by deed in lieu of foreclosure is an absolute conveyance of title to the real property, free and clear of any rights or claim of redemption, the transfer is the free act and will of the borrower and is not made under duress or coercion. Finally, the transfer is made for valuable consideration in the form of the lease with option to purchase contract granted by the lender to purchase the real property as further defined in this section.
Lease with option to purchase agreement
The lease with option to purchase agreement is the consideration given in exchange for the deed in lieu of foreclosure; the former lender leases to the former borrower the real property that is the subject of the mortgage in default. The term of the lease is the shorter of the period of time necessary for the former borrower to be approved for financing or other mortgage assistance by the federal housing administration or two years from the date of the lease with option to purchase agreement. When determining the monthly rent costs the following are taken into consideration: real property taxes, homeowner’s insurance premiums, and any homeowners’ association or condominium dues. The former borrower has the option to purchase the real property at a specified price until the termination of the lease.
This bill was signed by the governor on June 28, 2016 and is effective 91 days after filing with the Secretary of State. The full text of the bill can be found here.
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