Pre-Foreclosure Options Letter - Foreclosure Fairness Act

So this morning, I got this wonderful call on my new HTC Evo.  I love my new phone.  Anyway, the meeting was with Rick Torrance and Valerie Grigg Devis from the Public Safety Unit of the Department of Commerce.  I know, your saying, "who?!? why?!?, what the..."  Well, the new law signed by Governor Gregoire that implements HB 1362 on July 22, 2011 is being administered, at least in part by the Department of Commerce.  The Department of Commerce, or COM as they like to call it has the unenviable duty of manufacturing a number of notices which will be used by attorneys and housing counselors to access the new provisions which will be codified in RCW 61.24.

The first notice, and this is the one the banks have been asking for specifically, is the newly minted Pre-Foreclosure Options Letter.  We have to thank Mr. Bruce Neas for the snazzy title and really, he should be thanked for much of the product that is the Foreclosure Fairness Act.  This is the first notice included under section 16 of the new act and it specifically requires that notice be given in English and Spanish from the lender notifying the homeowner of its options, including mediation.

This letter is being developed with model language and should be approved by the AG's office next week when it will be sent out for translation into Spanish.  You must note, that the banks were unwilling to foot the cost in translating this item.  They would rather that the tax payers eat the cost of translation.  I guess they will still need make sure they have a Spanish speaking attorney available to verify that COM got it right.  So, here is to job creation!

This notice will be sent to homeowners and will contain most of what we find in section 5(c) of the law which will amend RCW 61.24.031.  The Notice will say you have 30 days to contact the beneficiary (bank) and request mediation, I mean options.  You will note, in Section 8, the bill allows you to request mediation on or after July 22 as long as you have received a notice of default.  So you won't be left out.


Though this Pre-Foreclosure Notice is the top priority for COM, it is not the one of the most interest to me.  COM has until June 22nd to post and provide the Notice for Referral which will detail what must happen prior to an attorney making a referral to mediation.  This notice is also detailed in section 16 and refers to new section 7 which states in part, "[An] attorney referring a borrower to mediation shal send a notice to the borrower and the department, statement that mediation is appropriate."  The only thing that I did not get out my conversation this morning is what the heck does "appropriate" mean?

This form is also in production and I was told it will be posted early next month but as of this time, the forms are still unavailable for public perusal.  There are four additional notices which are produced either by COM or the mediator which the homeowner has little or no control over.  Those will also be available but of much less interest.

There does seem to be a rush by the banks to get NODs out before July 22nd.  However, that rush really is to avoid the recording costs, not to avoid the law, well maybe it is to avoid the law, but section 8 puts them squarely in it.  The issue is going to be this, if you have a sale date set for July 22nd (which ironically is a Friday and the day the law goes into effect) and my office faxes a referral to mediation to COM before the sale, does the Trustee have to push off the sale and the bank set up the mediation?  I believe the answer to this question is YES, YES, and YES!!! if you didn't hear me.

So, I am going to be holding a Midnight party at my offices on July 21st to send off mediation referrals for anyone that would like one.  Once 12:01am hits, the fax will be a humming.  I am kidding...or am I.  I guess maybe you should give me a call on my new EVO before Thursday, July21st. 425-314-6737.

Its a bird, its a plane,...its a flying horse with some help?

Growing up, I enjoyed Greek mythology.  The monsters, the gods, the heros, it was all very exciting and when it came to pegasus, who didn't want a horse that could fly so you could get away from the nightmare we all called puberty?  Well, Pegasus may be making a new landing soon for lenders and carrying them away from the nightmare life of robosigning.  I said this blog would be of practical use, and this time I am including this as a practical use item for the lenders and their attorneys that will be reading this because I am suing them.  Happy Holidays.

In a recent post from Housing Wire, Pegasystems has launched a new product that will help banks not screw up the foreclosure process.  The biggest problem with foreclosure, is that it is a law, and most people like it when you follow the law.  I know its like a total bummer.  The banks have been doing 75 mph down the freeway and its time they realized its a 20mph school zone.

The software is supposedly designed to help the lender through the pre-default stages in identifying defaulting loans and ensure the process is as efficient and trouble free for the bank as possible (read the preceding as cheap and fast).  The principal for the company was quoted as saying, "Pega’s new pre-foreclosure solution vastly improves the visibility, certainty and efficiency of the overall process and provides unmatched quality controls and integrity.  Servicers can sleep better at night knowing that their documentation is error-free."(emphasis added).

That better night sleep is so important, especially when you have attorneys sitting at the edges of your banker dreams with Jason masks and machetes.  I have to say, with the number of mistakes that have walked through my door, and the foreclosures that I have started over because of errors, this process is a nightmare for the bankers.

Last week, one of my clients, who had a Notice of Default that had significant errors in it, received a new Notice of Default after a letter I sent to the bank and trustee caused the trustee to revise and reissue.  The first NOD had Trustee's fees of just over $1000, the new NOD included over $4000 in fees, mostly due to my letter.  If every mistake were to only cost the banks $3000, the losses would be astronomical.  The funny thing is, the newly issued NOD still isn't 100% accurate.  Maybe I will sign the new letter Jason.

So, if the banks would like to escape some of these nightmares, I would recommend them spending some cash  and flying away on Pegasystems if it will help them conform to state law.  Because if they don't get Pegasus to help them, I am more than willing to help them find out what the law says and how they screwed it up!