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July - December 2008 December 18, 2008 — Streamlined Modification Program (SMP) Now Available to Borrowers; Program Part of Ongoing Effort to Prevent Foreclosures Streamlined Modification Program (SMP) announced by the Federal Housing Finance Agency (FHFA) in November is now available to Fannie Mae servicers and borrowers as an option to help prevent foreclosures. Fannie Mae on December 12, 2008, provided information and guidelines to its servicers regarding the implementation of the SMP The SMP is designed to be a streamlined process for modifying the loans of a large number of borrowers who are delinquent in their mortgage payment and may be able to avoid a foreclosure through the program. As FHFA has indicated, SMP was intended to help set standards in the mortgage servicing industry for conducting loan modification programs on a large scale as a foreclosure prevention measure. The streamlined process allows a borrower to sign a single document at the outset of the workout process that both establishes a new monthly payment during a three-month trial period, and sets forth the modification terms that will take effect if the borrower makes the new payments during the trial period. The program is available to borrowers who have missed at least three monthly payments on their existing mortgages. December 18, 2008 — Fast Track Workouts For Delinquent Borrowers With Freddie Mac-Owned Mortgages Underway November 20, 2008 — Fannie Mae To Suspend Foreclosures Until January 2009 While Streamlined Modification Program is Implemented In order to support the streamlined modification program announced on November 11, 2008, Fannie Mae today issued a notice to its loan servicing organizations and retained foreclosure attorneys directing them to suspend foreclosure sales on occupied single-family properties as well as the completion of evictions from occupied single-family properties scheduled to occur from November 26, 2008 until January 9, 2009. November 20, 2008 — Freddie Mac Suspends All Foreclosure Sales Of Occupied Homes From Day Before Thanksgiving Until January 9, 2009   Freddie Mac announced it has ordered its national network of mortgage servicers and foreclosure attorneys to suspend all foreclosure sales and evictions involving occupied single family and 2-4 unit properties with Freddie Mac-owned mortgages between November 26, 2008 and January 9, 2009. More July 8, 2008 — SB 1137 (Perata) Provisions that affect homeowners: Mandatory Discussions with Borrowers or Due Diligence to attempt loan modification; Duty to investors to offer loan modification Mandatory Discussions with Borrowers or Due Diligence to attempt loan modification; • Civil Code § 2923.5 (a)(1) provides that a Notice of Default cannot be filed until 30 days after contact is made with the borrower either in person or by telephone to assess the borrower’s financial situation and explore options to avoid foreclosure. Civil Code § 2923.5 (a)(2) requires that borrowers be advised that they have a right to request another meeting within 14 days and provided with the toll-free HUD telephone number to find a HUD-certified housing counseling agency. • Civil Code § 2923.5(a)(1) provides that a Notice of Default may be filed even if borrowers have not been contacted per Civil Code § 2923.5(a)(1), if the mortgagee, beneficiary or authorized agent has performed due diligence as described in detail in Civil Code § 2923.5 (g)(1)-(5). • Civil Code § 2923.5(b) requires that a Notice of Default include a declaration that the lender or authorized agent contacted the borrower, tried with due diligence to contact the borrower, or the borrower surrendered the property.   • Civil Code § 2923.5(c) requires that if a Notice of Default was filed before July 8, 2008, then the lender or authorized agent must include as a part of the notice of sale a declaration that states the borrower was contacted to assess the borrower’s financial situation, exploring the borrower’s options to avoid foreclosure and lists any efforts made to contact the borrower. • Civil Code § 2923.5(e) provides that a borrower may designate a HUD-certified counseling agency, attorney or other advisor to discuss with the lender or authorized agent on his or her behalf, options to avoid foreclosure. Any modification or workout plan must be approved by the borrower. • Civil Code § 2923.5(h) provides that Civil Code § 2923.5(a), (c) and (g) shall not apply if the borrower has surrendered the property per Civil Code § 2923.5(h)(1), contracted with entities as described in Civil Code § 2923.5(h)(2), or filed for bankruptcy Civil Code § 2923.5(h)(3). • Civil Code § 2923.5(i) provides that Civil Code § 2923.5 applies only to loans made from1/1/03, to 12/31/07 that are secured by residential real property and are for owner-occupied residences — the borrower’s principal residence. Duty to Investors to offer loan modification • Civil Code § 2923.6 declares that a bank or mortgage servicer has a duty to its investors to offer loan modification terms that will yield a net present value that is greater than what would be achieved if a lender took back and sold the collateral. More California foreclosure law substantially revised More Lenders Must Accept Loan Modifications