Foreclosure Relief For A Stronger Arizona

Arizona House Democrats

FORECLOSURE RELIEF FOR A STRONGER ARIZONA HB 2601 foreclosures; limitation; affidavit Rep. Daniel Patterson

HB 2522 foreclosure rescue Rep. Rae Waters

The Homeowner Relief Act would grant temporary (60 day) relief to homeowners, who are in foreclosure and in danger of losing their home. 4 The bill requires the owner to submit a signed, sworn and notarized affidavit to the trustee in order to postpone a sale. 4 During the postponement period, the owner is granted the opportunity to negotiate a revised payment of the loan. 4 Additionally, it encourages the lender and owner to make efforts to arrive at revised loan terms. 4 If the owner makes timely monthly payments under this scenario, the sale may be postponed for up to one year; otherwise the trustee can reschedule the sale. 4 The act expires June 30, 2012. 4 Other states have introduced similar bills The Foreclosure Fraud Rescue Act protects homeowners who are facing foreclosure from scams and fraud. A foreclosure rescue is intended to delay or prevent foreclosure proceedings for the homeowner while allowing them to remain in possession of their property. There are two basic types of foreclosure rescue scams: 1) A rescuer provides financial assistance to the homeowner by paying off overdue mortgage payments in return for title to the property. The homeowner is allowed to continue living in the home by paying rent to the rescuer until the home can be bought back. If the homeowner falls behind on payments again, the rescuer may then evict the homeowner because the rescuer has the title to the house. The homeowner remains responsible for the original mortgage, no longer has ownership interest in the house and has no place to live. Hundreds of Arizona homeowners have lost their homes and equity through scams that intentionally make rental prices so high that homeowners can rarely afford them. 2) The rescuer promises a homeowner to act as a foreclosure consultant and negotiate a modification to a mortgage loan for a high fee. These services are normally available for free or at a much lower cost from non-profit housing counselors. The rescuer is only making the offer for the money and rarely helps the homeowner. This bill: 4 Defines a foreclosure rescue transaction as a mortgage loan so that it is subject to the same foreclosure process as a mortgage loan. 4 The scam artist would have to go through the foreclosure process in order to evict the homeowner. 4 Defines the exchange of a title to property as security for an agreement as Equitable Mortgage, which is also subject to the foreclosure process. 4 Defines an Unfair Foreclosure Rescue Transaction and identifies fraudulent practices. 4 Outlines the ability of the homeowner to void an Equitable Mortgage and regain title to the property. 4 Allows the homeowner to bring action in court, to regain money the homeowner may have paid in the agreement, and to recover damages. 4 Prohibits persons from acting as foreclosure consultants unless they fall into one of the existing categories of licensed pros or nonprofit orgs that provide help to homeowners.

HB 2464 tenant notice; foreclosures Rep. Barbara McGuire

HB 2510 home equity purchasers; licensure; regulation Rep. Ben Miranda

HB 2545 foreclosures; terms; notice Rep. Robert Meza

HCM 2007 self-employed individuals; mortgages

The Renter Relief from Foreclosure Act requires a landlord to allow a tenant at least 30 days to vacate a foreclosed property. 4 The bill additionally requires a landlord to notify the tenant in writing at least 60 days before a sale. 4 It states that a completed foreclosure terminates the tenant’s obligations under any lease agreement and the tenant is not liable for any rent or utilities. 4 If a landlord fails to provide adequate notice, the tenant may recover one month’s rent plus the security deposit. The Arizona Home Equity Theft Prevention Act requires “equity purchasers” or “foreclosure consultants” to be licensed. Unlicensed, unscrupulous “rescuers” are promising to help homeowners in default, but end up fraudulently deceiving them; either stripping equity from their homes or causing them to lose their homes altogether. 4 It requires a homeowner’s written permission before property is assigned and prohibits representations that tend to mislead. 4 Additionally, it requires a reconveyance agreement to be treated as a mortgage loan, provides criteria for written disclosures, specifies acts from which equity purchasers are prohibited and provides rescission requirements and penalties. 4 The ultimate goal is to provide Arizona homeowners with the necessary information to make an informed decision involving the sale or transfer of their home, and to preserve home ownership for financially distressed and vulnerable homeowners. The Home Loan Refinancing Act encourages parties involved in foreclosure proceedings to restructure loans in order to prevent foreclosure and delays a sale for up to one year if the beneficiary (the person to whom money is owed – lender) fails to negotiate in good faith with the trustor (borrower). 4 Specifies that the power of sale for owner occupied residential property can only be exercised under certain conditions. 4 If the beneficiary fails to negotiate in good faith or comply with certain disclosure and meeting requirements, and the trustor meets payment obligations, then the sale is postponed for at least a year from the initial notice of sale. 4 Prescribes a plain language disclosure describing the trustor’s rights in the notice of sale, and requires the notice to also include the name, address, telephone number and electronic mailing address of the beneficiary and the names and addresses of housing counselors who can provide assistance to and attend negotiations with the beneficiary of an owner occupied residential trust property. 4 Requires the local representative of the beneficiary to conduct a meeting with the beneficiary, the trustor, and at his/her option, a housing counselor. The purpose of the meeting is to review the trustor’s income status and to modify the terms of the promissory note or deed of trust to more favorably meet the trustor’s ability to pay. Encourages the U.S. Congress to consider and enact legislation enhancing the ability of self-employed individuals to refinance their loans and consider developing alternative lending standards for small businesses.

Rep. Steve Farley

For more information, call Sarah Muench, 602.926.3561