Delaware and Rhode Island Legislative Update

Delaware and Rhode Island Legislative Update

The Delaware legislature recently amended the Durable Personal Powers of Attorney Act, effective July 31, 2013, and the Rhode Island legislature recently enacted laws governing mortgage foreclosures, effective September 13, 2013.

DELAWARE SENATE BILL 122

A person my not refuse to accept an acknowledged personal power of attorney solely upon the basis that the form of the acknowledged personal power of attorney varies from the power of attorney set forth in the Durable Personal Power of Attorney Act.

 

The instructions to the Durable Personal Power of Attorney now include:  The following form may, but need not, be used to create a durable power of attorney.  The other sections of this chapter govern the effect of this or any other writing used to create a durable personal power of attorney.  A durable personal power of attorney that varies from the following form shall not be deemed to be invalid based solely upon such variance.

RHODE ISLAND HOUSE BILL 5335/SENATE BILL 416

 

 

This memorandum only applies to foreclosure of mortgages on owner-occupied, residential real property with no more than 4 dwelling units that is the primary dwelling of the owner and not to mortgages secured by other real property.  The provisions of this legislation expire July 1, 2018.

 

 

“Good faith” means that the borrower and lender deal honestly and fairly with the mediation coordinator with an intent to determine whether an alternative to foreclosure is economically feasible for the borrower and lender, as evidenced by some or all of the following factors:

  • The lender provided notice;
  • The lender designated an agent to participate in the mediation conference on its behalf, and with the authority to agree to a work-out agreement on its behalf;
  • The lender made reasonable efforts to respond in a timely manner to requests for information from the mediation coordinator, borrower, or counselor assisting the borrower;
  • The lender declines to accept the borrower’s work-out proposal, if any, and the lender provided a detailed statement, in writing, of its reasons for rejecting the proposal; and
  • Where a lender declines to accept the borrower’s work-out proposal, the lender offered in writing to enter into an alternative work-out/disposition resolution proposal that would result in net financial benefit to the borrower as compared to the terms of the mortgage.

 

“Mediation conference” means a conference involving the lender and borrower, coordinated and facilitated by a mediation coordinator whose purpose is to determine whether an alternative to foreclosure is economically feasible to both the lender and the borrower, and if it is determined that an alternative to foreclosure is economically feasible, to facilitate a loan work-out or other solution in an effort to avoid foreclosure.

 

 

“Mediation coordinator” means a person designated by a Rhode Island based HUD-approved counseling agency to serve as the unbiased, impartial, and independent coordinator and facilitator of the mediation conference, with no authority to impose a solution or otherwise act as a consumer advocate, provided that the person possesses the experience and qualifications established by the Department of Business Regulation (the “Department”).

 

 

“Mortgage” means an individual consumer mortgage on any owner-occupied, 1-4 unit residential property which serves as the owner’s primary residence.

 

 

A lender may not initiate any foreclosure of real estate unless the requirements discussed in this memorandum are met.

 

 

When a mortgage is not more than 120 days delinquent, the lender or its mortgage servicer or other agent or representative of the lender must provide to the borrower written notice, by certified and first class mail at the address of the real estate and, if different, at the address designated by the borrower by written notice to the lender as the borrower’s address for receipt of notices, that the lender may not foreclose on the mortgaged property without first participating in a mediation conference.

 

 

A form of written notice will be promulgated by the Department by August 14, 2013.  The written notice must be in English, Portuguese and Spanish, reference the property’s plat and lot information, and may be combined with any other required notice according to state or federal law.

 

 

The mediation conference must take place in person or over the phone at a time and place that is mutually convenient for the parties by an individual employed by a HUD-approved independent counseling agency selected by the lender to serve as a mediation coordinator not later than 60 days following the mailing of the notice.  The borrower must cooperate in all respects with the mediation coordinator including, but not limited to, providing all necessary financial and employment information and completing any and all loan resolution proposals and applications considered appropriate by the mediation coordinator.

 

 

A mediation conference between the borrower and lender conducted by a mediation coordinator must be provided at no cost to the borrower.  The HUD-approved counseling agency must be compensated by the lender at a rate not to exceed $500 per engagement.

 

 

If, after 2 attempts by the mediation coordinator to contact the borrower, the borrower fails to respond to the mediation coordinator’s request to appear at a mediation conference, or the borrower fails to cooperate in any respect with the requirements set forth in this memorandum, such requirements will be considered to be satisfied upon verification by the mediation coordinator that the required notice was sent.

 

 

Upon verification, a certificate will be issued immediately by the mediation coordinator authorizing the lender to proceed with the foreclosure action, including recording the deed.  The certificate must be recorded along with the foreclosure deed.  A form of the certificate will be promulgated by the Department by August 14, 2013.

 

 

If the mediation coordinator determines that after a good faith effort made by the lender at the mediation conference, the parties cannot come to an agreement to renegotiate the terms of the loan in an effort to avoid foreclosure, the good faith effort by the lender will satisfy the requirements.  A certificate certifying such good faith effort will be promptly issued by the mediation coordinator authorizing the lender to proceed with the foreclosure action and recording of the foreclosure deed.  The certification must be recorded along with the foreclosure deed.  A form of the certificate will be promulgated by the Department by August 14, 2013.

 

 

If the lender and borrower are able to reach agreement to renegotiate the terms of the loan to avoid foreclosure, the agreement must be written and executed by the borrower and lender.

 

 

Where a borrower and lender have entered into a written agreement and the borrower fails to fulfill his or her obligations under the written agreement, the requirements discussed in this memorandum do not apply to any foreclosure initiated within 12 months following the execution of the written agreement.  In such case, the lender must include in the foreclosure deed an affidavit establishing its right to proceed.

 

 

Any locally-based lenders will be considered to be in compliance with the requirements of this memorandum if:

  • The lender is headquartered in Rhode Island; or
  • The lender maintains a physical office or offices exclusively in Rhode Island from which office or offices it carries out full-service mortgage operations, including the acceptance and processing of mortgage payments and the provision of local customer service and loss mitigation and where Rhode Island staff have the authority to approve loan restructuring and other loss mitigation strategies; and
  • The deed offered by a lender to be filed with the city or town recorder of deeds as a result of a mortgage foreclosure action contained a certification that the requirements above have been satisfied.

 

A deed offered by a lender as a result of a mortgage foreclosure action must not be submitted to a city or town recorder of deeds for recording in the land evidence records of the city or town until and unless the requirements above are met.  The lender must include in the foreclosure deed an affidavit of compliance with the above requirements.  The failure of the lender to comply with such requirements voids the foreclosure without limiting the right of the lender to re-exercise its power of sale or other means of foreclosure upon compliance.  The rights of the borrower to any remedies available under the law are not limited by the provisions above.

 

 

Any existing municipal ordinance or future ordinance which requires a conciliation or mediation process as a precondition to the recordation of a foreclosure deed must comply with the provisions above.  Any provisions of such ordinances that do not comply with the above requirements are unenforceable.