Facilitated Mortgage Workout Program Seeks CA Approval
A CA bill to introduce a foreclosure mediation program recently received approval from the Assembly Appropriations Committee. Next, the bill will go before the California State Assembly floor.
Bill 1639, if passed and approved, will implement the Facilitated Mortgage Workout (FMW) Program which requires lenders to meet with borrowers in order to develop modification plans before going to foreclosure. The program ends January 1st, 2014.
The loans in question must have been in effect before January 1st, 2009, as well, the homes must have been occupied by the borrower as a principal residence. The mortgage’s principal balance must not be greater than $729,750.
This bill is important for homeowners as for the first time, a message is being sent to the banking and mortgage industries to meet with struggling owners and their lenders. These industries, thus far, have failed to pay as much attention to homeowners’ struggles as they should; more often than not, families simply need more time to adjust.
Also, the bill forces lenders to provide FMW information with notice of default. The borrower is required to return a form to the program requesting mediation within 30 days of notice of default. Borrowers must then deposit with the program’s administrator, 50% of the current mortgage payment each month, while the homeowner participates in the program.
Lenders, under this bill, are required to meet with the borrower within 14 days of contact with the borrower. According to statistics, one in 192 homes received a foreclosure filing in April, earlier this year—making it the fourth highest rate in the United States.