FAQs: Foreclosure Laws, Notices, Loss Mitigation and Trustee’s Sales

  1. When does HB 331 become effective?
  2. Does HB 331 apply to loans in default before September 1, 2011?
  3. Does HB 331’s upfront fee prohibition apply to persons who established mortgage modification services before September 1, 2011?
  4. Who must comply with the notice provisions of HB 331?
  5. What loans fall under the notice provisions of HB 331?
  6. Who enforces Idaho’s foreclosure laws?
  7. Who enforces the Consumer Foreclosure Protection Act?
  8. Will the Attorney General review a servicer’s forms to make sure they substantially conform to Idaho’s laws?
  9. What date should the beneficiary or beneficiary’s agent provide on the “Notice of Opportunity to Request Modification” required by Idaho Code § 45–1506C?
  10. Does Idaho Code § 45–1506C require the beneficiary or beneficiary’s agent to mail the “Notice of Opportunity to Request Modification” and “Modification Request Form” to the grantor on the same date the beneficiary or beneficiary’s agent signs and dates the “Notice of Opportunity to Request Modification”?
  11. Does the Attorney General provide sample forms that substantially conform to Idaho’s laws?
  12. Does Idaho law require a servicer to offer a homeowner the opportunity to discuss potential loss mitigation options?
  13. Will a homeowner with a pending loan modification application receive notice of his or her opportunity to request a modification under Idaho Code § 45–1506C?
  14. If a homeowner has a pending loan modification application, but receives a notice of default and returns the request for modification to his or her servicer, does the application process begin again?
  15. Will a homeowner whose loan modification application was previously rejected received notice of his or her opportunity to request a modification under Idaho Code § 45–1506C?
  16. If a homeowner’s loan modification application was previously rejected, but the homeowner receives a notice of default and returns the request for modification to his or her servicer, does the application process begin again?
  17. Does Idaho law require a servicer to offer a homeowner a loss mitigation option, such as a loan modification or forbearance?
  18. May a person charge homeowners a fee for assisting them in negotiating a modification of their mortgage loan?
  19. Does Idaho have a licensing requirement for persons who offer mortgage modification services?
  20. Where can homeowners get information about the federal loss mitigation programs?
  21. What type of notice does Idaho require in order to conduct a trustee’s sale?
  22. Can the Attorney General stop a trustee’s sale?
  23. Does the Attorney General enforce Idaho Code § 45–1506?
  24. Must the U.S. Department of Agriculture, Rural Housing Service comply with the notice provisions of HB 331?

When does HB 331 become effective?

September 1, 2011.

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Does HB 331 apply to loans in default before September 1, 2011?

Loan Modification Notice. Any notice of default applicable to a loan that comes within the purview of Idaho Code § 45–1506C that is provided to the grantor after the effective date of HB 331 must include the following three things:

  1. important supplemental notice (Idaho Code § 45–1506C(1))
  2. request for modification form (Idaho Code § 45–1506C(2)(a))
  3. notice required by Idaho law  (Idaho Code § 45–1505(3))

Postponed Trustee’s Sales. If a trustee’s sale conducted under Idaho Code § 45–1506 is postponed to a date after the effective date of HB 331, the trustee must comply with the requirements of Idaho Code § 45–1506(8).

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Does HB 331’s upfront fee prohibition apply to persons who established mortgage modification services before September 1, 2011?

Yes. HB 331 does not include a “grandfather clause.” Persons may not engage in fee-based loan modification activities after the effective date of HB 331 unless the person is licensed under title 54, chapter 20, Idaho Code, or licensed, exempt or excluded from licensing under part 2 or 3 of title 26, chapter 31, Idaho Code.

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Who must comply with the notice provisions of HB 331?

State or federally regulated beneficiaries.

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What loans fall under the notice provisions of HB 331?

The provision requiring the servicer to send notice to the borrower of his or her opportunity to request a loan modification evaluation applies to loans secured by a deed of trust and made by a state or federally regulated lender. The deed of trust must encumber the borrower’s primary residence. This is established by the granting of a homeowner’s property tax exemption for that year.

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Who enforces Idaho’s foreclosure laws?

Affected homeowners enforce Idaho’s foreclosure laws through legal actions. Homeowners whose property is foreclosed in violation of title 45, chapter 15, Idaho Code, may be able to file a private lawsuit against the individual(s) responsible for the unlawful foreclosure. Homeowners who find themselves in this situation should speak with an attorney immediately about their rights and options.

The Attorney General enforces Idaho Code § 45–1506C, which gives homeowners the opportunity to meet with their loan servicer and discuss a modification or other foreclosure prevention option. While the law requires the meeting, it does not require servicers to modify homeowners’ loans.

If a homeowner believes a violation of Idaho Code § 45–1506C has occurred, the homeowner can file a complaint with the Attorney General’s Consumer Protection Division. The Division will forward the complaint to the appropriate entity for a response.

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Who enforces the Consumer Foreclosure Protection Act?

The Attorney General has enforcement authority under Idaho Code § 45–1605. Consumers also have a private right of action against violators of the Act under Idaho Code § 48-608.

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Will the Attorney General review a servicer’s forms to make sure they substantially conform to Idaho’s laws?

No.  The Attorney General cannot provide private individuals with legal advice. Such questions must be directed to the individual’s private attorney.

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What date should the beneficiary or beneficiary’s agent provide on the “Notice of Opportunity to Request Modification” required by Idaho Code § 45–1506C?

The beneficiary or beneficiary’s agent should date the notice on the date which the beneficiary or beneficiary’s agent signs the notice.

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Does Idaho Code § 45–1506C require the beneficiary or beneficiary’s agent to mail the “Notice of Opportunity to Request Modification” and “Modification Request Form” to the grantor on the same date the beneficiary or beneficiary’s agent signs and dates the “Notice of Opportunity to Request Modification”?

No. Idaho Code § 45-1506C does not mandate how long a beneficiary or beneficiary’s agent has to mail the “Notice of Opportunity to Request Modification” and “Modification Request Form” to the grantor once the beneficiary or beneficiary’s agent signs and dates the “Notice of Opportunity to Request Modification.”

However, because the grantor typically has only 30 days to return the “Modification Request Form” to the beneficiary or beneficiary’s agent, the “Notice of Opportunity to Request Modification” and “Modification Request Form” must be sent to the grantor promptly after the beneficiary or beneficiary’s agent signs and dates the “Notice of Opportunity to Request Modification.”

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Does the Attorney General provide sample forms that substantially conform to Idaho’s laws?

Yes.  Sample forms are available here.

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Does Idaho law require a servicer to offer a homeowner the opportunity to discuss potential loss mitigation options?

Yes. Idaho Code § 45–1506C requires servicers to provide most homeowners with (1) a written notice that includes details about the homeowner’s loan and (2) a request for loan modification form that the homeowner must return to the servicer to notify the servicer of the homeowner’s interest in discussing a modification.

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Will a homeowner with a pending loan modification application receive notice of his or her opportunity to request a modification under Idaho Code § 45–1506C?

Yes.  Idaho Code § 45–1506C requires the notice and the request for modification form to accompany the notice of default.

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If a homeowner has a pending loan modification application, but receives a notice of default and returns the request for modification to his or her servicer, does the application process begin again?

Regardless of whether the servicer already is reviewing the homeowner’s loan modification application, the servicer must comply with the provisions of Idaho Code § 45–1506C, including the time limitations and the requirement to meet with the homeowner if the homeowner timely requests a meeting. 

With this in mind, the Attorney General urges servicers to implement procedures that avoid delaying the modification approval process due to receiving a defaulted homeowner’s duplicative loan modification application.  When possible, the homeowner’s assigned relationship manager as provided in Supplemental Directive 11-04 should continue to work directly with the homeowner.

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Will a homeowner whose loan modification application was previously rejected received notice of his or her opportunity to request a modification under Idaho Code § 45–1506C?

Yes.  Idaho Code § 45–1506C requires the notice and the request for modification form to accompany the notice of default.

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If a homeowner’s loan modification application was previously rejected, but the homeowner receives a notice of default and returns the request for modification to his or her servicer, does the application process begin again?

Regardless of whether the servicer previously rejected the homeowner’s loan for a modification, Idaho Code § 45–1506C requires the servicer, if the homeowner so requests, to review the homeowner’s loan for a modification and meet with the homeowner to discuss the loan.  Nothing, however, requires the servicer to grant the modification.

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Does Idaho law require a servicer to offer a homeowner a loss mitigation option, such as a loan modification or forbearance?

No. The federal government determines the eligibility requirements for its loss mitigation   programs and lenders have internal standards for their proprietary loss mitigation offers.

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May a person charge homeowners a fee for assisting them in negotiating a modification of their mortgage loan?

It depends. Various state and federal laws restrict who can charge consumers for mortgage modification services.  For example, some individuals may charge a fee if they are licensed by the Idaho Department of Finance. With some exceptions, individuals who are not licensed with the Department, cannot charge consumers for mortgage modification services. The Federal Trade Commission prohibits all entities, other than attorneys, from collecting a fee until the homeowner accepts the modification.

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Does Idaho have a licensing requirement for persons who offer mortgage modification services?

Yes.  Part 2 of the Idaho Residential Mortgage Practices Act, title 26, chapter 31, Idaho Code, outlines the relevant licensing requirements and exemptions. The Act, along with a licensing application, is available on the Idaho Department of Finance’s website.

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Where can homeowners get information about the federal loss mitigation programs?

Visit the Making Home Affordable website at www.makinghomeaffordable.gov.

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What type of notice does Idaho require in order to conduct a trustee’s sale?

Idaho Code § 45–1506 requires a trustee, at least 120 days before the sale date, to mail a written notice to the homeowner and personally serve on the occupant of the property or post at the property a copy of the notice. The notice must include: (a) the names of the trustee, lender and borrower; (b) a description of the property; (c) all default information; (d) the amount owed; and (e) the date, time and location of the sale.

Idaho Code § 45–1506(8) requires a trustee, at least 14 days before a “postponed” sale is conducted, to mail an amended notice of trustee’s sale by certified mail, return receipt requested to the grantor in the trust deed and any other person identified in Idaho Code § 45–1506(2). The notice must provide: (a) the names of the trustee, lender and borrower; (b) a description of the property; (c) all default information; (d) the amount owed; and (e) the date, time and location of the sale.

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Can the Attorney General stop a trustee’s sale?

No.  A homeowner, however, may have private legal remedies available under state or federal laws. Because time is of the essence, the homeowner should consult with an attorney immediately after receiving a notice of sale.

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Does the Attorney General enforce Idaho Code § 45–1506?

No.  A homeowner who believes an entity has violated any requirement included in Idaho Code § 45–1506 should consult with a private attorney about potential legal remedies.

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Must the U.S. Department of Agriculture, Rural Housing Service comply with the notice provisions of HB 331?

No. The Supremacy Clause of the United States Constitution prohibits states from regulating the activities of the federal government.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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