Provides forbearance of residential mortgage foreclosures under certain circumstances; places additional requirements on attorneys, residential mortgage lenders, and courts, as part of foreclosure process.
If enacted, A865 would alter the landscape of residential mortgage foreclosures significantly. The bill introduces specific legal requirements for lenders, which must include notifying borrowers of their right to request forbearance. Additionally, it enhances the mediation options available for borrowing parties, pushing them to engage in structured discussions aimed at settlement. This can potentially lead to a reduction in foreclosures and promote more equitable resolutions for homeowners grappling with financial hardship. Furthermore, the bill aims to protect vulnerable borrowers by ensuring that interest rates do not increase during the forbearance period, thus maintaining their financial stability.
Assembly Bill 865 (A865) aims to provide important protections for borrowers facing foreclosure on high-risk mortgage loans. It mandates a six-month forbearance period for borrowers who formally request it after receiving a summons for foreclosure. During this forbearance period, lenders must halt all foreclosure proceedings, ensuring that borrowers have a chance to explore alternatives like loan modification or refinancing, particularly through mediation. This strategy is particularly targeted at homeowners who possess high-risk mortgages, typically characterized by volatile interest rates or unfavorable terms.
Despite its positive intentions, A865 may face contention regarding the increased regulatory burden on lenders and the implications for judicial resources. Some stakeholders argue that additional requirements—such as the attorney certification that confirms diligence in reviewing foreclosure documents—could complicate and prolong foreclosure proceedings. These concerns stem from varying perspectives on how best to balance the interests of lenders and borrowers within the legal framework of foreclosure law.
The bill not only outlines procedural obligations but also integrates a broader framework of accountability in foreclosure actions. For instance, it stipulates that lenders must provide detailed certifications regarding their ownership of the mortgage and the calculations of amounts owed by borrowers in court proceedings. Further, it allows for evidentiary hearings at the request of the debtor, thus enhancing protections against wrongful foreclosure. Importantly, these provisions will sunset two years post-enactment, reflecting a commitment to reevaluation and adjustment based on observed outcomes.