Delaware Amends Laws Relating to Foreclosures
by: Louis Danastorg
Delaware has recently amended titles 10 and 29 of the Delaware Code regarding its real estate foreclosure proceedings. Plaintiffs to a mortgage foreclosure involving an owner-occupied one-to-four family primary residence must wait 45 days before filing the action after sending a Notice of Intent to Foreclose to the borrower. Such notice may only be sent after the borrower defaults on the obligations set forth in the original loan agreement. Once the borrower fails to meet his or her obligations under the loan terms, the plaintiff must send the Notice to the borrower by both postage-paid certified mail and first-class mail.
Upon nonpayment or nonperformance of mortgage conditions, the lender may sue in Superior Court at any time following the last day payment was due. The Court must then instruct the sheriff, through a writ of scire facias, to notify the borrower of his or her right to appear and contest the seizure of property as satisfaction of the security agreement. The sheriff must also notify record owners acquiring title subject to the mortgage and anyone with an equitable or legal interest of record; lien holders and tenants must also be notified, but are not considered necessary parties and do not need to be joined to the suit as defendants.
Once 45 days from the Notice of Intent have expired, the sheriff must then make a public notice of the property to be sold. The Notice of Sale must be posted at least ten days prior to the sale and in the ten most public places in the county, as well as sent to the borrower. Further, the Notice of Sale must be advertised for two weeks in a local newspaper and a newspaper published in the county nearest to the subject property.
Before the Superior Court may enter any judgment with regards to the foreclosure the borrower must have been given the opportunity to apply for relief under federal or plaintiff offered proprietary loss mitigation programs. The plaintiff may demonstrate the defendant’s opportunity by providing the borrower a list of any applicable loss mitigation programs and instructions for completing an application. The plaintiff may also satisfy this requirement by executing an affidavit, which asserts that the defendant has been provided the opportunity to apply for relief and that the mortgage is: 1) not subject to a loss mitigation program, 2) ineligible due to defendant’s failure to apply, provide required information, or complete requirements of the program, or 3) otherwise determined ineligible.
House Bill No. 40
Section 1:
The notice of intent to foreclose shall be sent to the borrowers by certified mail-postage prepaid, return receipt requested, and bearing the postmark of USPS-and by first class mail.
Section 2:
If the borrower is eligible for any federal or proprietary loss mitigation program, the plaintiff must include a list of potentially applicable programs, instructions for initiating a completed application, and telephone number to confirm the receipt of the application.
Section 3:
The plaintiff must include an accounting of the mortgage obligations covering the 12 month period preceding the alleged default. At minimum, the accounting must include a payment history for the 12 months and how those payments had been allocated towards principal, interest, attorney fees, other applicable fees, and the payment installments required under the loan agreement. The accounting shall also include the mortgage due date, any information the plaintiff relies upon as basis for the default claim, and a certification of the truthfulness of the statements made. If the loan servicer provides certification instead of the plaintiff, then the servicer must identify itself as such and recite its authority to act on the plaintiff’s behalf.
Section 4:
The Superior Court no longer has the judicial power to create new procedures allowing plaintiffs to re-schedule mediation conferences in connection with filing a complaint.
Section 5:
The plaintiff owes the Superior Court a mediation fee upon its receipt of defendant’s duly completed Certificate of Participation. If the mediation conference has been cancelled due to a defendant checking “NO” on the Certificate of Participation, no fee shall be required. Otherwise, the required mediation fee shall be due and must be paid by the plaintiff within 30 days of filing. A mediation fee does not limit or restrict any other applicable fees. Should a mediation fee become overdue, the Superior Court has the discretion to reschedule any mediation conference until such fee is paid.
Section 6:
Should the defendant file a bankruptcy petition before the close of mediation, the mediation is not permitted to continue. If the Bankruptcy Court lifts the automatic stay, the plaintiff must request that a new mediation conference be scheduled. The Superior Court presiding over the foreclosure may not enter any judgment until the day after this new mediation conference.
Section 7:
Where a bankruptcy petition has been filed, mediation may not continue unless the automatic stay is lifted or modified with respects to the mortgage obligation, or mediation is permitted to proceed by an order or directive of the Bankruptcy Court.
Section 8:
Parties to a foreclosure action may agree at a mediation conference to schedule an additional conference. If the plaintiff has not been required to pay the mediation fee due to the defendant’s failure to timely submit a completed Certificate of Participation, the fee, which must be paid before the date is set, will become due upon the scheduling of the first additional mediation conference.
Section 9:
If applicable, plaintiffs may provide an affidavit stating that the Notice of Intent to Foreclose was sent to borrower.
Section 10:
The Auto Residential Mortgage Foreclosure Mediation Program and Office of Foreclosure Prevention shall be extended an additional four years beyond current sunset date in January 2014.
About the Author:
Louis Danastorg, J.D., M.B.A. is a Regulatory Compliance Consultant at Bankers Advisory, Inc. He is a graduate of Vanderbilt University and earned his Juris Doctor and Masters of Business Administration from Suffolk University. He can be reached at Louis@bankersadvisory.com
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.
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