HR 4848 IH

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Save Our Neighborhoods Act of 2012’.

SEC. 2. STAYS OF FORECLOSURES.

(a) Cause of Action-

(1) IN GENERAL- A mortgagor of a property subject to a federally related mortgage loan may file a motion before a court in the jurisdiction in which the property is located for an order under subsection (d).

(2) INTERIM ORDER- The court shall, on the date of such filing, enter an order that shall–

(A) stay any foreclosure proceedings (including proceedings before a State court) that have been brought against the property that is subject to the federally related mortgage loan; and

(B) remain in effect for a period of 60 days, beginning on the date that the order is entered.

(3) LIMITATION- The mortgagor of the property subject to a federally related mortgage loan is only allowed to file one motion under subsection (a)(1).

(b) Consensual Revision of Mortgage- The mortgagor and mortgagee shall meet not later than 30 days after the mortgagor files under subsection (a). Not later than 15 days prior to that meeting, the mortgagee shall provide the mortgagor with a list of local housing counseling agencies approved by the Secretary of Housing and Urban Development. The mortgagor may be accompanied by a counselor from such an agency. If the mortgagor and mortgagee execute a consensually modified mortgage agreement within 60 days of the court granting the stay, the order under subsection (a)(2) would terminate. If at the end of the 60 days an agreement has not been reached, the court may issue an order under subsection (d) in accordance with subsection (c). The mortgagor may request not more than 1 additional meeting after the first meeting and before the end of the period during which foreclosure proceedings are stayed pursuant to an order under subsection (a) or (d). The mortgagee shall comply with that request not later than 30 days after that request.

(c) Standard of Proof- The court shall grant a motion under subsection (a)(1) for an order under subsection (d), if the mortgagor demonstrates by a preponderance of the evidence the following:

(1) That the mortgagor has a reasonable ability to make payments described under subsection (d)(5).

(2) Financial hardship of the mortgagor.

(3) That the property subject to the mortgage would be the primary residence of the mortgagor.

(d) Order Described- An order under this subsection shall, beginning on the date that is 60 days after the filing of the motion under subsection (a)(1)–

(1) stay any foreclosure proceedings that have been brought against the property that is subject to the federally related mortgage loan, including proceedings before a State court and eviction or detainer proceedings in a non-judicial foreclosure State;

(2) remain in effect for a period of up to 3 years beginning on the date that the order is entered, except that the period shall terminate if an agreement under subsection (b) is executed during such period;

(3) prohibit the assessment or collection of any late fees regarding payments on the federally related mortgage loan;

(4) toll the statute of limitations for any other applicable laws pertaining to the federally related mortgage loan;

(5) require that the mortgagor make payments in an amount the court determines appropriate, which may include the fair market rental value of the property (determined by the court in accordance with subsection (f)), to the mortgagee at such times as the court determines appropriate; and

(6) require that the mortgagee apply such payments–

(A) first, to any taxes owed on the property;

(B) then, to any obligations relating to insurance, including homeowner’s insurance on the property;

(C) then, to any interest due on the mortgage for that period under the terms of the mortgage; and

(D) finally, to the principal amount due on the mortgage for that period under the terms of the mortgage.

(e) Result of Failure To Revise During Stay of Foreclosure- If an order under subsection (d) terminates and the mortgagor and mortgagee have not submitted an agreement described in subsection (b) to the court on or before the date that the order terminates, the court shall enter an order–

(1) ordering an appraisal to determine the fair market value of the property to be performed by a licensed appraiser approved by the Secretary of Housing and Urban Development;

(2) if the fair market value of the property, as determined by the appraiser is less than the principal remaining on the mortgage loan, adjusting the principal amount to the fair market value, giving consideration to the appraisal and any other information the court determines appropriate;

(3) ordering reasonable interest on the principal as adjusted under paragraph (2) based on the average prime offer rate (as such term is defined in section 129C of the Truth in Lending Act (15 U.S.C. 1639c)) for mortgages; and

(4) if the fair market value is greater than the principal remaining on the mortgage loan, ordering payments set at a reasonable interest rate on the remaining principal based on the average prime offer rate for mortgages on that date.

(f) Determination of Fair Market Rental Value- In determining the fair market rental value of a property for purposes of subsection (d)(5), the court shall consider the following:

(1) The fair market rents for the market area in which the property is located for similar property calculated for other Federal rental housing programs.

(2) Any other information the court determines appropriate.

(g) Authority of Magistrate Judges- Any proceeding regarding a motion under subsection (a) may be heard by a magistrate judge of the United States, and that magistrate judge, notwithstanding section 636(b)(1)(A) of title 28, United States Code, may issue an order in accordance with this section.

(h) Limitation on Remedies- The mortgagee’s remedies shall be limited to those that would be available as if the proceeding were a foreclosure proceeding.

(i) Definitions- In this Act:

(1) The term ‘federally related mortgage loan’ has the meaning given such term under section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602).

(2) The term ‘financial hardship’ means any financial burden of a mortgagor that causes that mortgagor to be reasonably unable to make a payment on that mortgage, including–

(A) reduction in or loss of income that was supporting the mortgage;

(B) change in household financial circumstances;

(C) recent or upcoming increase in the mortgagor’s monthly mortgage payment;

(D) an unavoidable increase in other expenses;

(E) a lack of cash reserves to maintain payment on the mortgage and cover basic living expenses at the same time (cash reserves include assets such as cash savings, money market funds, stocks or bonds, but exclude retirement accounts);

(F) excessive monthly debt payments, including if the mortgagor has been using credit cards, a home equity loan or other credit to make the mortgage payment;

(G) the mortgagor has been subject to predatory lending practices; and

(H) other reasons for hardship identified and explained by the mortgagor.

(3) In determining whether a lending practice is predatory, the court shall consider whether the mortgagor has been subject to practices including but not limited to: abusive collection practices; balloon payments; encouragement of default; repeat financing where the equity is depleted as a result of financing; excessive fees; excessive interest rates; fraud, deception, and abuse; high loan-to-value ratio; lending without regard to ability to repay; loan flipping; mandatory arbitration clauses; payday lending; pre-payment penalties; refinancing of mortgages with a loan that does not provide a tangible economic benefit to the borrower; refinancing unsecured debt; payment of single-premium credit insurance; the process of referring borrowers who qualify for lower-cost financing to high-cost lenders; subprime lending; high yield-spread premiums.

SEC. 3. REGULATORY AUTHORITY OF THE CONSUMER FINANCIAL PROTECTION BUREAU.

The Director of the Bureau of Consumer Financial Protection of the Federal Reserve System may make rules or issue guidance to carry out this Act.

SEC. 4. DURATION OF THIS ACT.

This Act shall be effective for 5 years, beginning on the date of enactment of this Act.

source: http://www.govtrack.us/congress/bills/112/hr4848/text

In May of 2008, Bank filed a foreclosure suit concerning property in Broward County; Anthony Acosta was among the named defendants. In October of 2009, Acosta’s attorney, Charles Neustein, filed an unsigned motion to withdraw. The motion to withdraw was not ruled upon. Bank filed a motion for summary judgment on February 3, 2010. A notice of a February 25, 2010 hearing on the motion for summary judgment was served on February 1, 2010; the notice indicates it was served on Acosta through Attorney Neustein. On February 25, 2010, the trial court rendered a final summary judgment of foreclosure in favor of Bank. The judgment contains a certificate of service, indicating it was served on Acosta through Attorney Neustein.

On June 10, 2010, Acosta, through Attorney Neustein, filed a “Verified Motion to Set Aside Final Judgment of Foreclosure and Stay Foreclosure Sale.” The motion alleged the final judgment was entered after counsel inadvertently failed to attend the summary judgment hearing due to his paralegal’s failure to calendar the hearing; the motion is signed and “sworn to” by counsel and the paralegal. Counsel also asserted he did not receive a copy of the motion for summary judgment, the affidavit of Bank’s counsel in relation to the motion for summary judgment, or the notice of hearing on the motion for summary judgment. According to counsel, after the filing of his motion to withdraw, he did not receive any pleadings, responses to discovery, or orders or notices, with the exception of an amended affidavit an Bank’s counsel on February 18, 2010, and a motion to reschedule foreclosure sale. Neustein contended it was the motion to reschedule that provided him the first notice of the final judgment.

The record does not contain a written response to the 1.540(b) motion or a transcript of any hearing held on the motion. It appears the hearing was held during motion calendar and was non-evidentiary. The trial court denied the 1.540(b) motion without explanation.

Florida Rule of Civil Procedure 1.540(b) authorizes the trial court to relieve a party from a final judgment based upon “mistake, inadvertence, surprise, or excusable neglect.” A trial court’s denial of 1.540(b) relief is reviewed for an abuse of discretion. See, e.g., SunTrust Bank v. Puleo, 76 So. 3d 1037, 1039 (Fla. 4th DCA 2011). Despite the broad discretion reposed in the trial court, we find an abuse of discretion in the instant case and must reverse. Appellant’s claim that a failure to appear due to a calendaring or clerical error is the type of “excusable neglect” or “mistake” that warrants relief under rule 1.540(b) is well-supported in Florida law. See, e.g., J.J.K. Int’l, Inc. v. Shivbaran, 985 So. 2d 66, 68-69 (Fla. 4th DCA 2008) (holding it was error to deny 1.540(b) motion seeking relief from order of dismissal entered after counsel failed to appear at hearing on motion to dismiss because secretary mistakenly marked hearing as “cancelled”); Wilson v. Woodward, 602 So. 2d 547, 549 (Fla. 2d DCA 1992) (holding it was abuse of discretion to deny 1.540(b) relief from summary judgment after plaintiff’s counsel failed to appear for hearing due to secretary’s failure to calendar). Here, the alleged calendaring error was supported by the verified motion, signed and sworn to, by both counsel and the paralegal that made the error. The appellant thus made a colorable claim which satisfied the excusable neglect prong for relief under rule 1.540(b).

Additionally, Florida law also requires that the party seeking relief under rule 1.540(b) demonstrate a meritorious defense. See America’s Yate de Costa Rica v. Armco Mfg., Inc., 82 So. 3d 882, 885 (Fla. 4th DCA 2011). Appellant satisfied this requirement for relief as well. The verified motion alleged the existence of meritorious defenses, i.e., Bank’s failure to comply with the forbearance, mortgage modification and foreclosure prevention loan servicing requirements imposed by the National Housing Act, 12 U.S.C. § 1701×(c)(5); Bank’s failure to comply with all conditions precedent to acceleration of the note and mortgage; Bank’s failure to send, and appellant’s failure to receive, the notices that are a condition precedent to acceleration; and that appellant does not owe the amount sued for.

Accordingly, we reverse the order denying relief under rule 1.540(b). On remand, the court should conduct a limited evidentiary hearing on the motion so that Bank may have the opportunity to dispute the factual allegation of lack of notice made in support of the motion. See Chancey v. Chancey, 880 So. 2d 1281, 1282 (Fla. 2d DCA 2004) (noting that, where rule 1.540(b) motion alleges a colorable entitlement to relief, court should conduct a limited evidentiary hearing on the motion).

Reversed and Remanded for further proceedings.

WARNER and CONNER, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

Definition of ‘Robo-Signer’

An employee of a mortgage servicing company that signs foreclosure documents without reviewing them. Rather than actually reviewing the individual details of each case, robo-signers assume the paperwork to be correct and sign it automatically, like robots.

Investopedia explains ‘Robo-Signer’

In the third and fourth quarters of 2010, a robo-signing scandal emerged in the United States involving GMAC Mortgage and a number of major U.S banks. Banks had to halt thousands of foreclosures in numerous states when it became known that the paperwork was illegitimate because the signers had not actually reviewed it. While some robo-signers were middle managers, others were temporary workers with virtually no understanding of the work they were doing.

Read more: http://www.investopedia.com/terms/r/robo-signer.asp#ixzz1vQDnrUxo

H/T Nye Lavalle