31 Oct Vermont Legislative Update
The Vermont legislature recently amended its laws governing foreclosure mediation, effective December 1, 2013.
VERMONT HOUSE BILL 431
The foreclosure mediation requirements apply to all foreclosure actions on dwelling houses of 4 units or less that are occupied by the owner as a principal residence unless:
- The loan involved is not subject to any government loss mitigation program requirements;
- Prior to commencing the foreclosure action, the lender or a representative of the lender met with or made reasonable efforts to meet with the borrower in person in Vermont to discuss any applicable loss mitigation options; and
- The lender certifies in a separate document filed with its complaint in the foreclosure action that the requirements above have been satisfied and describes its efforts to meet with the borrower in person to discuss applicable loss mitigation efforts.
The foreclosure mediation provisions do not apply to a commercial loan.
“Commercial loan” means any loan that is an:
- Obligation of corporations, including municipal and nonprofit corporations;
- Obligation incurred by any person, partnership, association, or other entity to finance in whole or in part income-producing business or activity, but not including an obligation incurred to finance family dwellings of 4 units or less when used as a residence by the borrower or to finance real estate which is devoted to agricultural purposes as part of an operating farming unit when used as a residence by the borrower; or
- Obligation to finance the purchase, construction, or improvement of property for seasonal or part-time occupancy and not as a place of legal residence.
“Government loss mitigation program” means:
- The federal Home Affordable Modification Program (“HAMP”);
- Any loss mitigation program for loans owned or guaranteed by government-sponsored entities such as Fannie Mae, Freddie Mac, the Federal Housing Administration, or the U.S. Department of Veterans Affairs;
- Any loss mitigation program for loans guaranteed by the U.S. Department of Agriculture-Rural Development that are not owned by an instrumentality of the United States or Vermont; or
- A settlement agreement with a government entity, or any state or federal law or regulation, regarding the notification, consideration, or offer of loss mitigation options.
In a foreclosure action, whenever the borrower requests mediation prior to 4 months after judgment is entered and before the end of the redemption period specified in the decree, the court must refer the case to mediation, subject to certain exceptions.
Unless the lender and borrower agree otherwise or the court so orders for good cause shown, all mediation must be completed prior to the expiration of the redemption period specified in the decree and within 120 days of the mediator’s appointment. The redemption period will not be stayed on account of pending mediation.
The Vermont Bar Association (“VBA”) has the authority to establish a fair and neutral mediator selection process. If the lender and borrower are unable to select a mediator through the selection process established by the VBA, the court will appoint a qualified mediator for the case.
During all foreclosure mediations, the parties must address the available foreclosure prevention tools and, if disputed, the amount due on the note for the principal, interest, and costs or fees.
The lender must produce for the borrower and mediator:
- If a modification or other agreement is not offered, an explanation why the borrower was not offered a modification or other agreement; and
- For any applicable government loss mitigation program, the criteria for the program and the inputs and calculations used in determining the homeowner’s eligibility for a modification or other program.
The lender no longer need produce for the borrower and mediator documentation of its consideration of the options available, including the data used in and the outcome of any HAMP related “net present value” calculation.
The borrower must make a good faith effort to provide to the mediator within a time determined by the court or mediator (previously or 20 days prior to the first mediation), information on his or her household income and any other information required by any applicable government loss mitigation program.
Within 45 days of appointment, the mediator must hold a premediation telephone conference to help the lender and borrower complete any necessary document exchange and address other premediation issues. At the premediation telephone conference, the mediator must, at a minimum, document and maintain records of the progress the lender and borrower are making on financial document production, any review of information that occurs during the conference, any request for additional information, the anticipated time frame for submission of any additional information and the lender’s review of the information, the scheduling of the mediation session, and which of the persons will be present in person at the mediation or that the parties and the mediator have agreed that personal presence at the mediation is not required.
During the mediation, the mediator must document and maintain records of:
- Agreements about information submitted to the mediator;
- Whether a modification or other foreclosure alternative is available and, if so, the terms of the modification;
- If a modification or other foreclosure alternative is not available, the reasons for the unavailability; and
- The steps necessary to finalize the mediation.
The lender and borrower must each have at least one permitted person present in person at the mediation unless all parties and the mediator agree otherwise in writing.
Within 7 days of the conclusion of any mediation, the mediator must report in writing the results of the process to the court and both parties, and must provide a copy of the report to the Office of the Attorney General for data collection purposes. The report submitted to the Attorney General’s office must include all applicable government loss mitigation program criteria, inputs, and calculations performed prior to or during the mediation and all information related to the mediation requirements. The report submitted to the Attorney General’s office is confidential and is exempt from public copying and inspection, provided that any public report by the Attorney General may include information in aggregate form.
The report no longer must include all HAMP-related “net present value” calculations and other foreclosure avoidance tool calculations performed prior to or during the mediation.
The court may impose appropriate sanctions against a non-complying party, including:
- Tolling of interest, fees, and costs;
- Reasonable attorney’s fees;
- Monetary sanctions; and
- Dismissal without prejudice.
The following provisions have been deleted from the foreclosure mediation laws:
The court may, on motion of a party, find that the foreclosure mediation requirements have been met and that the parties are not required to participate in mediation if the lender files a motion and establishes to the satisfaction of the court that it has complied with the applicable requirements of HAMP and supports its motion with sworn affidavits that:
· Include the calculations and inputs required by HAMP and employed by the lender; and
· Demonstrate that the lender or servicer met with the borrower in person or via videoconferencing or made reasonable efforts to meet with the borrower in person.