Amends TCA Title 45 and Title 47.

PRE-FORECLOSURE NOTICE<br /> <br /> This bill requires that for a residential foreclosure sale, the lender or mortgage servicer must mail, by first-class mail, a notice addressed to the borrower at the borrower's primary address as indicated in the records of the lender or mortgage servicer at least 30 days before recording a notice of default and election to sell or commencing a civil action and at least 30 days after the borrower's default. The notice must contain: <br /> <br /> (1) A summary of the borrower's rights, including the borrower's right to:<br /> <br /> (2) A statement of civil release for servicemembers, noting that if the borrower is a servicemember or a dependent of a servicemember, the borrower may be entitled to certain protections under the federal Servicemembers Civil Relief Act, regarding the servicemember's interest rate and risk of foreclosure, and counseling for covered servicemembers that is available from Military OneSource and the United States Armed Forces Legal Assistance or another similar agency; <br /> <br /> (3) A summary of the borrower's account;<br /> <br /> (4) A statement of the facts establishing the right of the lender or servicer to cause the trustee to exercise the trustee's power of sale or to commence a civil action for recovery of any debt, or for the enforcement of any right, under a residential mortgage loan;<br /> <br /> (5) For notices of default, a statement that a failure to cure the alleged default within 30 days of the date of mailing the notice may result in the property described in the notice being subject to foreclosure action a date no later than 90 days in the future; <br /> <br /> (6) Unless the borrower has exhausted the process for foreclosure prevention alternatives, as described below, a statement of the foreclosure prevention alternatives offered by, or through, the lender or mortgage servicer, sent to the borrower not later than five business days after a notice of default and election to sell is recorded, or a civil action for the recovery of any debt, or for enforcement of any right, under a residential mortgage loan is commenced; and <br /> <br /> (7) A statement that borrower may request a copy of the borrower's mortgage or deed of trust; and a copy of the borrower's payment history since the borrower was last less than 60 days past due. <br /> <br /> COMMENCING A FORECLOSURE SALE<br /> <br /> This bill prohibits a lender, mortgage servicer, or an authorized agent of a lender or mortgage servicer from commencing a civil action for residential foreclosure sale until 30 days after initial contract is made with the borrower as required by the foreclosure prevention alternatives provisions, or 30 days after satisfying the requirements provided below. The lender or mortgage servicer complies with the foreclosure prevention alternative provisions if the borrower submits an application for a foreclosure prevention alternative offered by, or through, the lender or mortgage servicer, and the lender or service does the following: <br /> <br /> (1) Satisfies the requirements of the pre-foreclosure notice;<br /> <br /> (2) Attempts to contact the borrower by mailing a letter to the borrower, via first-class mail, informing the borrower of the borrower's right to discuss foreclosure prevention alternatives and providing the toll-free telephone number made available by the United States department of housing and urban development to find a housing counseling agency approved by that department;<br /> <br /> (3) After mailing the letter required by (2), attempts to contact the borrower by telephone at least three times at different hours and on different days. A mortgage servicer satisfies these requirements if it determines, after attempting to contact the borrower, that the primary telephone number of the borrower that is on file with the mortgage servicer and any secondary telephone numbers on file with the mortgage servicer have been disconnected;<br /> <br /> (4) If the borrower does not respond within 14 calendar days after the mortgage servicer satisfies the requirements of (3), sends, by certified mail, return receipt requested, or another mailing process that requires a signature upon delivery, a letter that includes the information required by (2);<br /> <br /> (5) Provides a means for the borrower to contact the mortgage servicer in a timely manner, including a toll-free telephone number that provides access to a live representative during business hours; and<br /> <br /> (6) Posts on the homepage of its internet website, if any, a prominent link to certain information described in this bill, such as possible options available to borrowers, toll-free numbers, and other notices.<br /> <br /> FORECLOSURE PREVENTION ALTERNATIVES<br /> <br /> This bill requires a mortgage servicer to contact the borrower in person or by telephone to assess the borrower's financial situation and to explore options for the borrower to avoid a foreclosure sale. During the initial contact, the mortgage servicer must advise the borrower that the borrower has the right to request a subsequent meeting and, if requested, the mortgage servicer must schedule the meeting to occur within 14 calendar days after the request. A meeting may occur by telephone. The assessment of the borrower's financial situation and discussion of the options to avoid a foreclosure sale may occur during the initial contact or at the subsequent meeting scheduled for that purpose. The borrower must be provided the toll-free telephone number made available by the United States department of housing and urban development to find a housing counseling agency certified by the department.<br /> <br /> This bill authorizes the loss mitigation personnel of a mortgage servicer to participate by telephone during any contact with a borrower. <br /> <br /> A borrower is authorized to designate a housing counseling agency certified by the United States department of housing and urban development, an attorney, or another advisor to discuss with the mortgage servicer, on the borrower's behalf, the borrower's financial situation and options for the borrower to avoid a foreclosure sale. A foreclosure prevention alternative offered during a contact with a person or agency designated by a borrower pursuant to this section is subject to the approval of the borrower.<br /> <br /> This bill requires, upon a borrower's request for a foreclosure prevention alternative, that a mortgage servicer must promptly establish a single point of contact and provide to the borrower one or more direct means of communication with a single point of contact who is responsible for: <br /> <br /> (1) Communicating the process by which a borrower may apply for an available foreclosure prevention alternative and the deadline for any required submissions to be considered for the foreclosure;<br /> <br /> (2) Coordinating receipt of all documents associated with the available foreclosure prevention alternatives and notifying the borrower of any missing documents necessary to complete an application for a foreclosure prevention alternative;<br /> <br /> (3) Having access to current information and personnel sufficient to timely, accurately, and adequately inform the borrower of the current status of the foreclosure prevention alternative;<br /> <br /> (4) Ensuring that the borrower is considered for all foreclosure prevention alternatives offered by, or through, the mortgage servicer and for which the borrower is or may be eligible; and<br /> <br /> (5) Having access to a person or persons with the ability and authority to stop the foreclosure process when necessary.<br /> <br /> The single point of contact must remain assigned to the borrower's account until the services determines that all foreclosure prevention alternatives offered by, or through, the servicer have been exhausted or the borrower's account becomes current. If the responsibilities of a single point of contact are performed by a team of personnel, then the servicer must ensure that each member of the team is knowledgeable about the borrower's situation and current status in the process of seeking a foreclosure prevention alternative<br /> <br /> This bill provides that no later than five business days after receiving an application for alternatives, or any document in connection with such application, a lender, servicer, mortgagee, or beneficiary of the deed of trust must send the borrower written acknowledgement of the receipt of the application or document. The lender or servicer must include in the initial acknowledgment of receipt: <br /> <br /> (1) A description of the process for considering the application;<br /> <br /> (2) Any deadlines that affect the processing of an application for a foreclosure prevention alternative, including, without limitation, the deadline for submitting any missing documentation;<br /> <br /> (3) The expiration dates for any of the documents submitted by the borrower; and<br /> <br /> (4) A statement requiring all parties to negotiate in good faith toward reaching a mutually agreed upon foreclosure prevention alternative, which includes providing accurate and timely documentation as required by a foreclosure prevention alternative.<br /> <br /> This bill requires that if a borrower submits an application but does not initially submit all documents or information required to complete the application, the mortgage servicer must include in the initial acknowledgement of receipt statement of any deficiencies in the borrower's application and allow the borrower not less than 30 days to submit and document's or information required to complete the application. <br /> <br /> If a borrower submits an application, then the lender, servicer, or an authorized agent of such person must not record a notice of default and election or notice to sell, commence a civil action for a residential foreclosure, or conduct a foreclosure sale until one of the following has occurred: <br /> <br /> (1) The borrower fails to submit all the documents of information required to complete the application within 30 days after the date of the initial acknowledgment of receipt of the application sent to the borrower;<br /> <br /> (2) The lender or mortgage servicer makes a written determination that the borrower is not eligible for a foreclosure prevention alternative, and any appeal period has expired;<br /> <br /> (3) The borrower does not accept a written offer for a foreclosure prevention alternative within 14 days after the date on which the offer is received by the borrower;<br /> <br /> (4) The borrower accepts a written offer for a foreclosure prevention alternative, but defaults on, or otherwise breaches the borrower's obligations under, the foreclosure prevention alternative; or<br /> <br /> (5) The later of the following:<br /> <br /> (A) 15 days has passed after the denial of an appeal to the decision that the borrower is not eligible for a foreclosure prevention alternative; or<br /> <br /> (B) If an appeal is successful, 14 days after a first lien modification or another foreclosure prevention alternative offered after appeal is rejected by the borrower; or, if the appeal is successful and a first lien loan modification or another alternative is offered and accepted, the date on which the borrower fails to timely submit the first payment or otherwise breaches the terms of the offer.<br /> <br /> An application is complete when a borrower has supplied the mortgage servicer with all documents required by the servicer within the reasonable timeframes, not less than those required by these provisions, specified by the servicer. <br /> <br /> This bill requires that no later than 30 days after the borrower submits a complete application, the servicer must submit to the borrower a written offer for alternatives or a written statement of denial. If the borrower accepts the offer, then the servicer must provide the borrower with a copy of the complete agreement evidencing the foreclosure prevention alternative, signed by the lender, servicer, or an agent or authorized representative. If the borrower's application is denied, the lender or servicer must send to the borrower a written statement of: <br /> <br /> (1) The reason or reasons for the denial;<br /> <br /> (2) The amount of time the borrower has to request an appeal of the denial, which must be not less than 30 days; and <br /> <br /> (3) Instructions regarding how to appeal the denial, including how to provide evidence that the denial was in error. <br /> <br /> If the borrower appeals the denial of a complete application, no later than 30 days after the borrower requests the appeal, then the servicer must submit to the borrower a written offer for an alternative or a written denial of the appeal. The borrower must accept or reject the offer within 14 days after receiving it. <br /> <br /> This bill prohibits a mortgage servicer from charging or collecting an application, processing, or other fee for a foreclosure prevention alternative; or a late fee for periods during which: <br /> <br /> (1) A foreclosure prevention alternative is under consideration or a denial is being appealed;<br /> <br /> (2) The borrower is making timely payments under an alternative; or <br /> <br /> (3) A foreclosure prevention alternative is being evaluated or exercised. <br /> <br /> This bill requires that a servicer only evaluate an application from a borrower who has already been evaluated and afforded a fair opportunity to be evaluated if there has been a material change in the borrower's financial circumstances since the date of the borrower's previous application and that change is documented by the borrower and submitted to the service. <br /> <br /> NOTICE OF SALE REQUIREMENTS<br /> <br /> This bill requires that the trustee, or other person authorized to make the sale under the terms of the deed of trust, must, after expiration or no less than 90 days following the recording of the notice of default and election to sell, and before the making of the sale, give notice of the time and place of the sale by recording the notice of sale and by: <br /> <br /> (1) Providing the notice to each trustor and any other person entitled to notice by personal service, by electronic transmission if authorized by the parties, or by mailing the notice by registered and certified mail to the last known address of the trustor and any persons entitled to such notice; <br /> <br /> (2) Posting a similar notice particularly describing the property, for 20 days consecutively, in a public place in the county where the property is situated; and <br /> <br /> (3) Publishing a copy of the notice once each week, for three weeks, in a newspaper of general circulation in the county where the property is situated. <br /> <br /> LIABILITY AND REMEDIES <br /> <br /> This bill provides that the power of sale must not be exercised except where the mortgage transfer is made pursuant to an order, judgment, or decree of a court of record, or to secure payment of bonds or other evidences of indebtedness, until the following apply: <br /> <br /> (1) The lender or an authorized agent of the lender files for record, in the office of the recorder of each county where the mortgaged or trust property or some part of the parcel is situated, a notice of default that includes information described in this bill; and<br /> <br /> (2) No less than 90 days elapses following the filing of the notice of default. <br /> <br /> This bill requires that a civil action for a foreclosure sale involving a failure to make payment by a residential mortgage loan must be dismissed without prejudice, and any notice of default, election to sell, or notice of sale recorded must be rescinded and any pending foreclosure sale must be canceled if:<br /> <br /> (1) The borrower accepts a permanent foreclosure prevention alternative;<br /> <br /> (2) A notice of sale is not recorded within nine months after the notice of default and election to sell is recorded; or<br /> <br /> (3) A foreclosure sale is not conducted within 90 days after a notice of sale is recorded.<br /> <br /> The periods in (2) and (3) are tolled if a borrower has filed a case under federal law, until the bankruptcy court enters an order closing or dismissing the bankruptcy case or granting relief from a stay of foreclosure or trustee's sale; or submitted an application for a foreclosure prevention alternative, until the date on which: <br /> <br /> (1) A written offer for a foreclosure prevention alternative is submitted to the borrower;<br /> <br /> (2) A written statement of the denial of the application has been submitted to the borrower and any appeal period has expired; or <br /> <br /> (3) If the borrower has appealed the denial of an application for foreclosure prevention alternative, a written offer for an alternative or a written denial of the appeal has been submitted to the borrower. <br /> <br /> This bill requires that if a civil action for a foreclosure sale is dismissed, then a notice of default and election to sell recorded or a notice of sale recorded must be rescinded, any pending foreclosure sale is cancelled, and the mortgagee or beneficiary of the deed of trust is restored to its former position and has the same rights as though an action for judicial foreclosure had not been commenced or a notice of default and election to sell had not been recorded. <br /> <br /> This bill allows a borrower to bring an action for injunctive relief to enjoin a material violation of this bill if a trustee's deed upon sale has not been recorded. An injunction issued pursuant to this remains in place and any foreclosure sale must be enjoined until the court determines that the mortgage servicer, mortgagee, beneficiary of the deed of trust, or an authorized agent of such person has corrected and remedied the violation giving rise to the action for injunctive relief. An enjoined person may move to dissolve an injunction based on a showing that the material violation has been corrected and remedied.<br /> <br /> Under this bill, after a trustee's deed of sale has been recorded or a certificate of the sale of the property has been recorded, a borrower may bring a civil action in the district court in the county in which the property is located to recover the borrower's actual economic damages resulting from a material violation of this bill by the mortgage servicer, mortgagee, beneficiary of the deed of trust, or authorized agent of such person, if the material violation was not corrected and remedied before the recording of the trustee's deed upon sale or the recording of the certificate of sale of the property. If the court finds that the material violation was intentional or reckless or resulted from willful misconduct by a mortgage servicer, mortgagee, beneficiary of the deed of trust, or an authorized agent of such person, then the court may award the borrower the greater of actual damages or statutory damages of $50,000.<br /> <br /> This bill establishes that a mortgage servicer, lender, beneficiary of the deed of trust, or an authorized agent of such person is not liable for a violation of this bill that the person has corrected and remedied, or that has been corrected and remedied on its behalf by a third party, before the recording of the trustee's deed upon sale or the recording of the certificate of sale of the property. Further, a violation of this bill does not affect the validity of a sale to a bona fide purchaser for value and any of its encumbrances for value without notice. A court is authorized to award a prevailing borrower costs and reasonable attorney's fees for any action brought pursuant to this bill.<br />