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NEW FORECLOSURE LAW - FREQUENTLY-ASKED QUESTIONS (FAQ’S)
Compiled by the Bureau of Consumer Credit Protection

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INTRODUCTION

New laws to reduce foreclosures in Maine will take effect June 15, 2009.  These changes affect the way lenders and servicers must conduct foreclosure activity.  It applies to all foreclosure actions except ones in which a foreclosure date had already been published as of the day the Governor signed the bill into law.  A copy of Public Law 402 can be found here.

These questions and answers are designed to provide guidance for consumers and lenders in order to better understand, comply with or enforce the new state laws.

1. What is the effective date of the law?  As emergency legislation, the law becomes effective immediately upon the Governor’s signature.

2. What changes must lenders be aware of?  Lenders must be aware of several changes.  They include:

  1. Notice of Right to Cure Default.  These “cure” notices, sent before foreclosure can be started, previously required 30 days’ notice.  The new law expands that time frame to 35 days.  The newly-required notice must contain the following information:
    1. The borrower’s right to cure the default under the terms of the mortgage and state law;
    2. An itemization of all past due amounts causing the loan to be in default;
    3. An itemization of any other charges that must be paid in order to satisfy the full obligations of the loan;
    4. A statement that the mortgagor may have options available other than foreclosure, including available options with the lender, servicer or a counselor approved by HUD.  The statement must include language that the borrower is encouraged to explore available options prior to the end of the right-to-cure period;
    5. The address, telephone number and other contact information for persons having authority to modify the loan to avoid foreclosure;
    6. The name, address, telephone number and other contact information for all counseling agencies approved by HUD to assist Maine consumers (that list can be found at the following link);
    7. A statement that the mortgagor may request court-supervised mediation, as that mediation becomes available.
  1. Lenders are also required to provide electronic notice to the Bureau of Consumer Credit Protection (BCCP) within 3 days of providing a default notice to the borrower.  A “NEW Lender Pre-foreclosure Notice Reporting Requirement” link has been added to the BCCP’s website at www.Credit.Maine.gov.  Lenders must provide the following information to the BCCP:
    1. The name and contact information of the company that mailed the notice;
    2. The name and contact information of the owner of the mortgage;
    3. Whether the owner of the mortgage is (choose one) a state-chartered bank or credit union; a federally-chartered bank or credit union; a non-bank mortgage company; or a private mortgage lender;
    4. The date the Notice of Right to Cure was mailed;
    5. The name and property address of the consumer;
    6. The address to which the notice was sent;
    7. The name and contact information of an individual with authority to negotiate a loan modification; and
    8. The dollar amount needed to cure the default.

3. What will the Bureau of Consumer Credit Protection do with the information?

The bureau is required to send information to those consumers who have received Notices of Right to Cure, providing additional information, and encouraging them to contact the bureau at its toll-free new consumer foreclosure prevention hotline, 1-888-664-2569 (1-888-NO-4-CLŌZ)

4.  Must a lender take any additional new steps when foreclosing a residential (owner-occupied, 1-4 unit) mortgage?

Lenders must include a new cover document with each foreclosure summons and complaint.  This document is a one-page form that the consumer can use to respond to the Complaint, and to request court-supervised mediation. The final form has now been posted (see question 6 below).

The lender must also provide a pre-addressed envelope that the consumer can use to file his or her Answer with the court.

If the consumer requests mediation, that mediation is mandatory on lenders.  The lender must provide an individual at the mediation proceeding who is authorized to enter into loan modification agreements.

5. What provisions, if any, apply to foreclosing on a commercial, multi-unit dwelling?

Foreclosure attorneys should carefully read the new law, since it requires that certain notices be provided to tenants in an apartment building.

 

6. Has a final version of the one-page answer form been released?

Yes. At this time (November/December 2009), lenders can use one of two different versions of the form.  The first version, found here (Version 2009), has been in use since August, 2009 and can be used for all foreclosure summonses and complaints served on homeowners on or before December 31, 2009.  A newer version, which can be used now and into 2010, and which will become mandatory on January 1, 2010, is found here (Version 2010).  We recommend that all lenders and attorneys transition to the Version 2010 as soon as practicable, but no later than the end of December.