Friday, November 19, 2010

BREAKING NEWS: DC passes "Saving D.C. Homes from Foreclosure Emergency Act of 2010"

On Wednesday, the District of Columbia enacted the "Saving D.C. Homes from Foreclosure Emergency Act of 2010." The key provision of which all of us dealing with DC real estate purchases must be aware is that for all foreclosure sales occurring November 17th or after, a "Mediation Certificate" must be recoded among the DC Land Records PRIOR TO the issuance and recordation of the Notice of Foreclosure.

Foreclosure attorneys, title agents and title insurance companies are all working diligently to see exactly what this means for DC foreclosures, but as this "Mediation Certificate" has yet to be created (to our knowledge), there seems to be a gap between what the law requires and what can practically be done to effectively foreclose on a DC property.

Again, as with any of these DC Foreclosure developments, the situation is very dynamic and fluid. As we receive more clarification and direction, we will pass that information along. To see all of our updates on Foreclosures, click here.

Tuesday, November 9, 2010

DC Foreclosures Just Got a Little Tougher

On October 27th, District of Colombia Attorney General Peter Nickels issued this Statement of Enforcement Intent Regarding Deceptive Foreclosure Sale Notices. The Washington Post reported on this development here. In this statement, the Attorney General now requires:

Prior to initiating a foreclosure involving a District of Columbia homeowner, a trustee or noteholder is obligated to confirm that the District’s land records demonstrate that the noteholder has the security interest that will be listed in the foreclosure sale notice. Each assignment of interest (or other document) by which the security interest was transferred to the noteholder, or to one of the noteholder’s predecessors in the chain of conveyances from the maker of the note, must be recorded with the Recorder of Deeds.

This means that before a foreclosure sale can occur, there must be a clear chain of ownership of the indebtedness such that the public records match the name of the entity who is doing the foreclosing. Because of MERS and the securitization of loans today, this clear chain doesn't always exist.

How does this affect how we issue title insurance in DC?

We have received two underwriter bulletins on this subject. In the first, we are asked to comply with the statement and ensure there are "recorded assignments of the Deed of Trust each time the owner of the note sells the indebtedness so that a clear chain of ownership of the indebtedness leads to the lender who is directing the trustee to initiate the foreclosure action."

In the other bulletin (from another underwriter), we are asked for the following for DC sales transactions:

Proof that the foreclosed Deed of Trust was not secured by owner-occupied residential property at the date of initiation of foreclosure proceedings, in the form of an affidavit from the foreclosing lender or its agent stating that the defaulting borrower(s) did not occupy the property as his/her/their personal residence at the date foreclosure proceedings were commenced.

This obviously adds some some additional complexity to our title reviewing process, and may in some cases render a title uninsurable. Many speculate there may be some emergency legislative or judicial action to more clearly reconcile this opinion and that of MERS with respect to the latter's ability to foreclose on properties.

Stay tuned as more develops...